SPY Trends And Influencers

Last month in this space my Monthly Macro Review/Preview had the monthly outlook suggesting the upside for Copper (JJC) would continue while Gold (GLD) might consolidate with an upward bias. Crude Oil (USO) and Natural Gas (UNG) were in consolidation as well with an upward bias. U.S. Treasuries (TLT) were in a broad consolidation with a downward bias and the U.S. Dollar Index (UUP) looked to continue its slide. The Shanghai Composite (SSEC) looked to continue to move lower as well while Emerging Markets (EEM) continued to consolidate and the German DAX (DAX) looked strong. Volatility (VIX) looked to remain low giving an upside bias the US Equity Indexes. The montage of other indicators also favored the upside for US stocks. The charts of the Equity Index ETF’s SPY, IWM and QQQ were 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. How does an additional month impact the longer term picture? Let’s look at some charts.

The SPY completed a Tweezers Top for October. All it needs now is confirmation lower in November, far from certain. Continuing over the Hagopian Trigger Line for a bullish view, it has a Relative Strength Index (RSI) that is bullish and a positive Moving Average Convergence Divergence indicator (MACD) to reinforce the upward trend as it moves higher between the Median and Upper Median Lines of the bullish Pitchfork. It may just be consolidating before the next move as it is sitting near the full retracement of the 2007 high to the 2009 low. There will be a lot of volume that would consider taking risk off on a break even trade from that move lower. The previous high is the only resistance higher but the Measured Move takes it to 159. Support lower is found at 141.50 and 133.50 followed by 128.30. Under that turns the bias to bearish.

Consolidating In An Uptrend
The monthly outlook suggests further consolidation for Copper and Gold with an upward bias. Crude Oil is also in consolidation where Natural Gas has confirmed an upward bias. US Treasuries are in a broad consolidation with a in an uptrend and the US Dollar Index consolidating with a downside bias. The Shanghai Composite looks to continue lower as Emerging Markets consolidate and the German DAX looks strong, no change here. Volatility looks to remain low giving an upside bias the US Equity Indexes. The global of other indicators also favor the upside for US stocks with only Treasuries, if they move out of consolidation higher, giving downward pressure. The charts of the Equity Index ETF’s SPY, IWM and QQQ are in agreement with this bias with the SPY the strongest followed by the IWM and the QQQ bringing up the rear with the best chance of continued short term pullback. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.

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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