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Macro Week in Review/Preview December 31, 2011

Last week’s review of the macro market indicators looked heading into the last week of the year that Gold was consolidating but looking to move lower while Crude Oil may also consolidate but is biased to move higher. The US Dollar Index looked to continue higher while US Treasuries consolidate their loses above support. The Shanghai Composite looked to consolidate further within the downtrend while Emerging Markets ride a short term wave higher within their downtrend. Volatility was poised to continue lower. The influencers of the Equity Index ETF’s were mixed but biased to support Equities moving lower. This was in conflict with the short term view in the charts of SPY, IWM and QQQ which looked higher within a broad consolidation range, perhaps signaling a topping. The US Dollar Index joining Treasuries lower would help the rally in equities continue. But a reversal higher in Treasuries, joining the Dollar Index, could turn that consolidation range into a move lower. The strongest of the Equity Indexes was the SPY followed by the IWM and the weakest the QQQ.

The week began with Gold moving lower and Crude Oil moving higher, with both reversing later in the week. The US Dollar Index did move higher but not until later in the week while US Treasuries marched up off a bottom. The Shanghai Composite consolidated around the 2200 level while Emerging Markets consolidated in a narrow range. Volatility found bottom and rose marginally. These combined to give the Equity Index ETF’s SPY, IWM and QQQ a boost Tuesday followed by a series on consolidating candles with inside real bodies for the rest of the week. What does this mean for the coming week? Lets look at some charts.

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