SPY Trends and Influencers – November 19, 2011

Last week’s review of the macro market indicators looked once again for Gold ($GLD) and Crude Oil ($USO) to head higher with the US Dollar Index ($UUP) and US Treasuries ($TLT) looking to consolidate, with the Dollar biased higher and Treasuries lower on a break. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) both were poised to head lower. Volatility ($VIX) looked to remain in a lower range with a bias to the downside supporting movement in the Equity Index ETF’s, $SPY, $IWM and $QQQ to the upside. Again a violent move from either Treasuries or the US Dollar Index is likely to overwhelm the drift higher seen in the charts and force Equities in the opposite direction of the move. Watch and be prepared for it.

The week began with Gold and Crude consolidating their gains before Gold fell and Crude pulled a pop and drop. The US Dollar Index broke its consolidation higher while Treasuries headed to the top of their range. The Shanghai Composite headed to the top of its range before following Emerging Markets lower and Volatility held in the lower range. The Dollar Index and Treasuries ruled the week and drove all of the US Equity Index ETF’s lower, with the aid of falling commodities. What does this mean for the coming week? Lets look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY fell from a symmetrical triangle this week, finding support near the 100 day Simple Moving Average (SMA). The target move from this break down is about 116. The Relative Strength Index (RSI) on the daily chart shows a trending lower and breaking through the mid line while the Moving Average Convergence Divergence (MACD) indicator became increasingly more negative, both supporting further downside. The weekly chart puts the move in perspective. It is still within the consolidation range of the past 4 weeks. The RSI on the weekly timeframe continued to move lower under the mid line while the MACD continued its fade. As it tests the bottom of the range, the volume on the weekly basis has been falling off. It is set up for more downside. Support below 122 comes at 118.50 and then 115.88 and 112. It gets very bearish under there. Resistance on a bounce comes at 125 and 129. Above 130 the uptrend continues.

As we head into a Holiday shortened week, the market looks poised to move lower. Gold is set up to continue lower while Crude Oil remains in an uptrend but looks ready to continue its pullback. The US Dollar Index and US Treasuries both look strong, and the foreign markets followed, the Shanghai Composite and Emerging Markets both look to continue lower. Volatility looks to remain in the 30-36 range. Everything is aligned against Equities and in fact support the chart views that the Equity Index ETF’s, SPY, IWM and QQQ are all set to move lower but at support on the weekly charts. The Strong US Dollar Index and Treasuries will continue to be the key as they look to reinforce the negative view on Equities. If either or both move strongly against the chart set ups, US Equities could benefit and move higher. Use this information as you prepare for the coming week and trade’m well.

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If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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