Macro Week in Review/Preview May 19, 2012

• Posted by Greg Harmon
• on May 19th, 2012

Last week’s review of the macro market indicators saw after a dose of family for Mother’s Day the reality of a continued bearish bias taking hold. Gold and Crude Oil looked better to the downside with the US Dollar Index and Treasuries looking to continue to strengthen. The bullish flirtation of the Shanghai Composite might be over while the pullback in Emerging Markets continued. The Volatility Index was building pressure to move higher as well. These influencers set a backdrop for the Equity Index ETF’s to continue to the downside. The chart of the QQQ agreed whole-heartedly while the SPY and IWM were mixed with the intermediate term view continuing to hold steady. New highs by Treasuries or the Dollar Index would likely knock everything lower, while a pullback in bonds and the Dollar would provide a floor.

The week played out very closely along the lines of the technical story above for the second week in a row, at least to start. Gold and Crude did run lower with Treasuries moving higher, but Gold reversed mid week and drove higher. The Dollar Index moved higher as well but pulled back late in the week. The Shanghai Composite confirmed lower while Emerging Markets continued their bloodbath. The Volatility Index perked up and closed on the high above major levels. In response the Equity Index ETF’s all accelerated their moves lower closing near the lows for the week. Lets look at some charts.

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