SPY Trends And Influencers: November 25, 2012

Last week’s review of the macro market indicators suggested, heading into the shortened Thanksgiving week there were signs of a bottom, but not any reason to buy yet. Gold (GLD) looked lower within the neutral long term channel while Crude Oil (USO) was biased higher in the consolidation. The US Dollar Index (UUP) looked to continue higher while US Treasurys (TLT) seemed ready for a pullback in the uptrend.

The Shanghai Composite (SSEC) and Emerging Markets (EEM) were biased to the downside. Volatility looked to remain low with an upward bias keeping the bias lower for the equity index ETF’s (SPY), (IWM), and (QQQ), despite the potential reversal candles on their charts.

The week played out with Gold testing lower before finding support while Crude Oil drifted up. The US dollar held in a tight range while Treasuries fell back but found support. The Shanghai Composite consolidated at the lows while Emerging Markets moved back up into their consolidation range. Volatility took another step lower, remaining subdued. The Equity Index ETF’s confirmed the reversal candles from Friday and moved up all week. What does this mean for the coming week? Let's look at some charts.

SPY Daily (SPY)

SPY Weekly (SPY)

The SPY confirmed the Hammer from Friday higher and ran up throughout the shortened week. The run up was on decreasing volume, warranting caution into next week. The Relative Strength Index (RSI) ended the week making a new higher high for the first time since September 14 and the Moving Average Convergence Divergence indicator (MACD) has crossed to positive.

The weekly view shows a move higher off of the 50 week Simple Moving Average (SMA) back to the long term rising trend resistance. Also notice the triple bottom in the RSI with it now moving higher, and a peak at 70 following each bottom, with a MACD that is starting to improve. There is resistance higher at 142 and 143 followed by 144 and 146.60. Support lower comes at 140.10 and 138 followed by 135.70. Continued Uptrend.

Coming out of the Thanksgiving holiday the markets look set up for a run higher into the end of the year. Gold looks higher in its neutral trend while Crude Oil is set to head higher. The US Dollar Index appears biased lower in the uptrend while US Treasurys also look better lower. The Shanghai Composite is biased lower but being mindful of a possible double bottom, while Emerging Markets resume their consolidation under long-term resistance.

Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, and their charts seem to agree, with the lone caution being the recent move higher on decreasing holiday week volume. Let price guide, not volume. 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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