SPY Trends and Influencers September 30, 2011

Last week’s review of the macro market indicators saw Gold ($GLD) and Oil ($USO) ready for more downside into the last week of the third Quarter. The US Dollar Index ($UUP) and US Treasuries ($TLT) looked to continue higher. The Shanghai Composite ($SSEC) and Emerging Markets ($EEM) also looked to continue their down moves. Volatility ($VIX) looked to remain elevated and possibly break higher. The equity Index ETF’s, $SPY, $IWM, and $QQQ were all looking better to the downside. With the QQQ again being the key to holding the market together. If it loses support of the flag, the SPY and IWM could take the whole market lower. A spike in Volatility and continued moves higher in Treasuries and the Dollar Index should ensure it.

The week began with Gold dropping and then consolidating while Crude Oil found support and has consolidated. the US Dollar Index held up and tested higher while Treasuries rose after testing support. The Shanghai Composite continued its roll down the hill while Emerging Markets filled the gap before falling back again. Volatility remained elevated and the Equity Index ETF’s settled lower after a brief rise early in the week. 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.) Click the Get Premium button and sign up for the service to get access to the Full analysis with 20 detailed charts: Macro Week in Review/Preview September 30, 2011

SPY Daily, $SPY

SPY Weekly, $SPY

SPY continued its movement in the lower part of the broad range. The daily chart continues to point to more downside with a RSI that cannot hold over 50 and a MACD that is negative. The SMA’s are all sloping lower with the Bollinger bands turning down. On the weekly timeframe the bear flag continues. The 20 week SMA has crossed down through the 50 week SMA, the first to head lower. The RSI is bearish and the MACD, although negative, is starting to improve. The trend remains lower and if it finally breaks below the weekly flag the target on the breakdown is 95. Any bounce that is not contained by the flag top would signal a potential trend change higher.

Heading into the first week of the 4th Quarter the picture looks very similar to what it did last week. Gold and Crude Oil are set up to continue lower with a chance that Gold consolidates instead. The US Dollar and Treasuries are set up to continue higher and the Shanghai Composite and Emerging Markets lower. Volatility is expected to remain elevated and perhaps increase, supporting the negative bias in the Equity Index ETF’s SPY, IWM and QQQ. Use this information as you prepare for the coming week and trade’m well.

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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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