Macro Week in Review/Preview May 26, 2012

• Posted by Greg Harmon
• on May 26th, 2012

Last week’s review of the macro market indicators saw heading into the last week before the unofficial start of Summer the reality of a continued bearish bias as strong. Crude Oil looked better to the downside with Gold heading higher at the same time as global economic fears were growing. The US Dollar Index and Treasuries were looking to continue to strengthen with a chance that the Dollar Index consolidated first. The Shanghai Composite was now firmly heading lower in line with the crash in the Emerging Markets. The Volatility Index broke the pressure cooker to the upside and looked to continue to move higher. These influencers set a backdrop for the Equity Index ETF’s to continue to the downside. There was no disagreement or discussion this week. The charts of the SPY, IWM and QQQ whole-heartedly agreed with the downside bias. The only caution with global turmoil was to look for a reversal in the Dollar Index or Treasuries as a sign that the worst was over for equities.

The week played out with Gold falling to support before recovering while Crude Oil slowed the pace of the fall. The US Dollar broke out higher while Treasuries consolidated. The Shanghai Composite consolidated in a tight range near the recent lows while Emerging Markets slowed their decline, perhaps finding a bottom. Volatility consolidated at the bottom of the move higher. The Equity Index ETF’s halted their fall and built tightening bear flags through the week. What does this mean for the coming week? Let’s look at some charts.

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