SPY Trends And Influencers: December 22, 2012

Last week’s review of the macro market indicators suggested, heading into the last full week of the year, that there was still a bit of a cloud over the markets. Gold (GLD) was biased lower within the long term neutral trend, with Crude Oil (USO) looking steady with a bias to the downside on a move out of the range. The US Dollar Index (UUP) was biased to the downside if it were to break the tight range with US Treasurys (TLT) looking lower in the uptrend.

The Shanghai Composite (SSEC) was looking strong in the downtrend with Emerging Markets (EEM) strong but perhaps ready for a rest. The Volatility Index (VIX) was showing no fear anytime soon keeping the bias higher for the Equity Index ETF’s (SPY), (IWM) and (QQQ). Their charts showed some caution if not a pullback coming with the QQQ biased lower and weakest.

The week played out with Gold selling off as seen in the charts but Crude Oil moving higher. The US dollar and Treasurys also continued lower but both found a bottom and bounced to end the week. The Shanghai Composite consolidated the move higher from last Friday while Emerging Markets drifted up before giving it all back Friday. Volatility also drifted higher before a spike and pullback to end the week. The Equity Index ETF’s made a move higher before pulling back to end the week nearly flat. What does this mean for the coming week? Let's look at some charts.

SPY Daily (SPY)

SPY Weekly (SPY)

The SPY continued higher in a rising channel with a pullback to the bottom of the channel to end the week. The Relative Strength Index (RSI) is bullish but also pulling back and the Moving Average Convergence Divergence indicator (MACD) is positive and fading on the daily timeframe. Also the move lower Friday happened on strong volume. The charts above take the dividend Friday into account.

Moving out to the weekly chart shows it riding higher under the nearly 3-year trend line but still on track towards the Measured Move higher to 155.12. The RSI on this timeframe is rising and on the verge of moving into bullish territory with a MACD that is improving and about to cross to positive. These support more upside price movement.

There is resistance higher at 144.44 and 147 before the Measured Move target. Support lower comes at 142 and 139.80 followed by 138 and 134.40. A move under 142 breaks the rising channel and turns the short-term upside bias to downside. Continued Uptrend.

Heading into the last week of the year there is a positive tone in the price action of equities. That said Gold looks to continue lower while Crude Oil rises. The US Dollar Index seems content to move sideways with a downside bias while US Treasuries are biased lower. The Shanghai Composite and Emerging Markets are biased to the upside with risk of the Chinese market reversing. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the moves lower to end the week. Use this information as you prepare for the coming week and trade’m well.

Disclaimer: 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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