I left the moving averages on this chart, but they aren’t playing a roll right now since USO just blew through all of them last week, but on the way back up they could offer short term speed bumps.  The Williams %R technical indicator is still in oversold for the 14 and 28 day periods.  Once it breaks out of that grey area is when I think we’ll have a better idea this is a buying opportunity.  For now, get your trade finger ready.  A good entry point could be just days away, if not today.

The support area was a previous line of resistance and later support showing the 119 area is going to be one to watch in the future.  To the upside it looks like $121.00 – 121.50 might be the next line of resistance.  Since I’ve been typing this in the past 10 minutes SPY moved above the shortest trend line of lower highs from the past couple of days.  I’m still cautious about jumping in here, but once SPY clears $121.50 we could see another leg of the rally take it all of the way up to its upper trend line of higher highs.

I left the 50, 100 and 200 day moving averages in this chart to show how fast MDY has come off its lows.  Just one month ago MDY was trading below its 50 and 100 day moving averages, but now it’s more than 4% above its 50 day moving average and 7% above its 100 day moving average.  MDY hasn’t touched its 200 day moving average in a long time and would have to fall almost 13% to cross it again in the near term.  The 200 day moving average is moving higher every day, but it’s easy to expect a reversion to the mean and see MDY fall 5-10% to get closer to it.

For an odds play, MDY has finished higher each of the past seven days.  I don’t expect that trend to continue.  I’m not shorting MDY here, but have thought about buying some puts or at least a vertical put spread to gain on the impending dip I’m predicting.

The way the chart is moving it looks like the trading channel holding recently gives EEM a range from $38 (ish) to 40.  Along with this trading channel, the three potential technical indicators that are going to be most interesting to watch are the 20 and 200 day moving averages and the trend line of lower highs from the beginning of the year.  EEM hit resistance at the 20 day moving average today and stopped its intraday rally from its lows.  If EEM can get above its 20 day moving average, which might be a tall order after dipping below it the past couple of days, it will have to fight to get above this trend line of lower highs.

On the other hand the 200 day moving average offered support today around the same area as the bottom of this trading channel I’ve identified.  I hold the 200 day moving average in high regard when I see support hold.  Once the 200 day moving average is in play the downside risk typically starts diminishing.  All of that together makes EEM a good chart to watch as one of these indicators is going to break soon and should show us the likely direction for the following few weeks or 10%, whichever comes first.  I’m expecting the move to be higher and probably won’t exit my position even on a dip below the $38 range.

The 10 day moving average for SPY is at 107.89, so nearly dead on where it closed for the day, but slightly to the bulls favor.  Again, tomorrow will be interesting to watch this one too. 

Efharisto Hellas (Thanks Greece).

The trick now is deciding if that same moving average will hold or if the break from the trend line is foreshadowing of an even deeper correction.  The best case scenario for QLD based on this chart shows a slow rise with the previous line of support remaining, but as resistance.  I circled the past three times over the past year when QLD broke above oversold in the Williams %R indicator for the 14 and 28 day indicators.  Each time the indicator moved out of the oversold range QLD produced a new leg up in the long rally.  The key isn’t that it’s oversold now.  That can stay the case for days or weeks.  Watch when it moves higher to make it a true buying indicator.  To be sure it’s not a head fake, maybe it’d be even smarter to wait to wait for QLD to move above the trend line I referenced above.

The 50 day simple moving average (sma) gives extra resistance along the way too.  The 50 day sma is moving higher each day as the old lower levels slip off and new higher levels are added.  It’ll be a slow run for GLD if it follows this line, but gives us something to trade on if GLD can break above it for a few days.

Three trend lines stand out for GLD.  The lowest is the trend line of higher lows.  This line hasn’t broken yet and it’s key for the bulls to see it hold to stay invested.  A break below that line could mean a much deeper fall.  Just above that line and still holding support is a line that is debatable if it’s worth watching.  This line is a combination of previous highs and lows.   It’s holding now and could develop into a line to pay more attention to in the near future.  The third trend line was the line of lower highs that just broke.  Seeing a stop to the nose dive of a fall was big.  The biggest play for GLD in the near term could be more sideways movement, at least until the 50 day moving average ticks higher and/or the trend line of higher lows that started in August catches up.    Next stop lower could be the $105 area, then closer to $100, based on the highs and lows of October.

I won’t feel comfortable calling for a buy until I see Williams %R indicator move above oversold.  I marked the previous few times it’s made that move out of the bottom of its range and each time spelled a move higher for at least few weeks after.