SPY Trends and Influencers November 26, 2011

Last week’s review of the macro market indicators looked heading into a Holiday shortened week, that the market was poised to move lower. Gold ($GLD) was set up to continue lower while Crude Oil ($USO) remained in an uptrend but looked ready to continue its pullback. The US Dollar Index ($UUP) and US Treasuries ($TLT) both looked strong, and the foreign markets followed, the Shanghai Composite ($SSEC) and Emerging Markets ($EEM) both looked to continue lower. Volatility ($VIX) looked to remain in the 30-36 range. Everything was aligned against Equities and in fact supported the chart views that the Equity Index ETF’s, $SPY, $IWM and $QQQ were all set to move lower, but at support on the weekly charts. The Strong US Dollar Index and Treasuries would 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.

The week played out just as the charts told, for all constituents, for the first time in over a month. Gold and Oil both moved lower before Oil bounced to end the week. The US Dollar and US Treasuries both headed higher. The Shanghai Composite and Emerging Markets continued their retreat for the week. Volatility fell slightly but remained in lower end of the elevated range. The Equity Index ETF’s all continued lower as well. 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 gapped lower on Monday and never looked back. Now firmly within the consolidation zone from August and September but with a Relative Strength Index (RSI) that is heading lower and bearish on the daily time frame and a Moving Average Convergence Divergence (MACD) indicator that continued to grow more negative. It is now below all of the Simple Moving Averages (SMA) which have all turned lower. It also has Bollinger bands expanding to allow for more downside. A strong bias lower on the daily time frame. The weekly chart does not look any better. The RSI has been trending lower for several weeks while the MACD is about to cross bearishly negative. This view shows the near Marubozu candle continuing the fall from the Fibonacci Arc break and nearly at the next Arc. Support comes lower at 115.88 followed by 112 to 112.30 and 110. Resistance on a bounce higher comes at 118.50 followed by 120.60.

As November turns into December it looks like Santa Claus is sending a message to Americans as he is bring a rally only to the US Dollar and US Treasuries. Gold and Crude oil look ready to continue lower, while the Shanghai Composite and Emerging Markets do the same in their downtrends. Volatility looks to remain in the lower end of the elevated channel but with the first sign of a move3 higher. All of these combine to produce a horrible environment for the Equity Index ETF’s SPY, IWM and QQQ. The IWM and QQQ look the most extended so look for the SPY to catch up a bit in the coming week. The past week has the US Dollar and Treasuries driving the action and expect that to continue in the coming week. So any reversal in these should benefit Equities. 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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