SPY Trends and Influencers October 22, 2011

Last week’s review of the macro market indicators looked looks for Gold ($GLD) to continue in its consolidation with a slight bias to an upside break, while Crude Oil ($USO) continued higher with resistance nearby. Both the US Dollar ($UUP) and US Treasuries ($TLT) look poised to continue their recent moves lower. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) also looked to continue their recent moves higher but with resistance near and within the downtrend. Volatility ($VIX) appears to be receding and combined with the falling US Dollar and US Treasuries provides a solid background for Equity Index ETF’s, $SPY, $IWM and $QQQ to move higher. The QQQ is leading the charge higher and if it makes new highs and holds, expect the upside for the SPY and lagging IWM to continue. A reversal by the Dollar Index or Treasuries higher could derail the upside trend as could a sharp move lower by the Shanghai Composite.

Gold tailed off most of the week while Crude Oil stalled at resistance. The US Dollar drifted sideways while Treasuries fell slightly. The Shanghai Composite did stay in its down channel but started accelerating lower while Emerging Markets Consolidated. Volatility increased slightly for the week despite the Equity Index ETF’s SPY, IWM and QQQ stabilizing and surging higher on Friday.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 broke above the previous range and the 100 day Simple Moving Average (SMA) with a strong move higher Friday. It has a rising Relative Strength Index (RSI), now over 60 and a Moving Average Convergence Divergence (MACD) indicator that is increasing on the daily chart as it goes higher. The weekly chart shows the RSI testing the mid line with a MACD that is crossing bullishly positive. Indicators on both charts support further upside. It is not out of the woods yet though. There is resistance to the upside at the June consolidation range nearby.

Going into next week Gold looks to continue the move it started lower while Crude Oil consolidates at resistance with the possibility of a pullback. The US Dollar Index and US Treasuries both look to continue lower. The Shanghai Composite is on the edge of collapse and Emerging Markets look lower but may continue to consolidate. Volatility seems biased to the downside creating a supportive environment for the Equity Index ETF’s SPY, IWM and QQQ to continue higher. The SPY has the strongest set up going into the week with the QQQ the weakest. Almost time to get bullish. The moves in the US Dollar Index and US Treasuries continue to be the key drivers for Equity markets so be mindful if they reverse. Also as last week a precipitous fall in the Shanghai Composite could negatively impact US 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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