SPY Trends And Influencers: Monthly Edition September Into October 2012

Last month in this space my Monthly Macro Review/Preview had the monthly outlook suggesting the upside for Gold (GLD), Crude Oil (USO) and US Treasurys (TLT) would continue while the US Dollar Index (UUP) looked better lower.

Both the Dollar Index and Crude could consolidate further, and Copper (JJC) and Natural Gas (UNG) looked to be in ranges as well with the Natural Gas biased lower. The Shanghai Composite (SSEC) and Emerging Markets (EEM) looked to continue to move lower as well, with Emerging Markets possibly consolidating, while the German DAX (DAX) looked to continue to the upside.

Volatility (VIX) could go either way but looked to remain low with a drift higher. Despite the uncertainty that comes from the dollar and Treasurys diverging, the Equity Index ETF’s SPY, IWM and QQQ were set up to continue higher in the coming months, but with consolidation a strong possibility in the near-term for all but the QQQ. How does an additional month impact the longer term picture? Let’s look at some charts.

SPY

The SPY continues to ride higher with resistance at the 38.2% Fibonacci Fan Line. Breaking the full retracement level from 2007, it has a rising 20-month Simple moving Average (SMA) and Bollinger bands opening higher to support more upside.

The bullish and rising Relative Strength Index (RSI) and positive Moving Average Convergence Divergence indicator (MACD) also support continued advancement. The Measured Move higher takes it to 162. Support comes at 141 and 133.50 below before 126. Under 126 and the bias turns to neutral. Continued Upside.

The monthly outlook suggests the upside for Copper will continue while Gold may consolidate with an upward bias. Crude Oil and Natural Gas are in consolidation as well with an upward bias. US Treasuries are in a broad consolidation with a downward bias and the US Dollar Index looks to continue its slide.

The Shanghai Composite and Emerging Markets look to continue to move lower as well while Emerging Markets continue to consolidate and the German DAX looks strong. Volatility looks to remain low giving an upside bias the US Equity Indexes. The montage of other indicators also favor the upside for US stocks.

The charts of the Equity Index ETF’s SPY, IWM and QQQ are in agreement with this bias with the QQQ the strongest followed by the SPY and the IWM bringing up the rear with the best chance of continued consolidation. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.

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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