Macro Month in Review/Preview May into June 2013

• Posted by Greg Harmon
• on June 2nd, 2013

Last month in this space my Monthly Macro Review/Preview had the monthly outlook suggesting that the long party for Gold was ending and Copper was joining it lower. Crude Oil looked to continue to move in a tightening range while Natural Gas ran higher. The US Dollar Index also looked to flounder sideways as US Treasuries resumed their uptrend. The Shanghai Composite looked to continue to move lower as Emerging Markets continued to consolidate and the German DAX looked better towards new highs. Volatility could go either way but looked to remain low with the VIX heading towards a historic low range. These factors in aggregate supported further upside movement for the Equity Index ETF’s SPY, IWM and QQQ. Treasuries moving higher seemed counter intuitive to rising equity prices but noted there was historic precedent for it for extended periods of time. How does an additional month impact the longer term picture? Let’s look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

Metals

Gold, $GC_F

Gold continued lower, ending the month below the 50 month Simple Moving Average (SMA) for the first time since 2001. The Candle was contained within last month’s but the shorter lower shadow and break of the 8 year rising trend support auger for more downside. The Relative Strength Index (RSI) and Moving Average Convergence Divergence indicator are both falling and showing no sign of stopping yet, supporting more downside pressure. There is support at 1330 and then 1185 followed by 1050 and 984 before 890 and 725. Resistance higher is found at 1550. More Downside.

Copper, $HG_F

Copper continues to find support at the rising 100 month SMA but the Spinning Top for May shows indecision. The RSI is continuing to hold in bullish territory and the MACD is possibly leveling. If it does then maybe we get a bounce higher. Support is found right here at 3.00 and then 2.55. Below that it can get ugly very fast. Resistance is found higher at 3.34 and then 3.85 and over that it turns bullish. Continued Sideways Chop.

Fuel

West Texas Intermediate Crude, $CL_F

Crude Oil, continues to consolidate in an ever tightening range using the Hagopian Trigger Line from the bearish (red) Pitchfork as resistance and the SMA’s as support. The RSI is flat at the mid line and the MACD is also flat. No bias revealed in either. There is support lower at 85 and 79.50 followed by 72.20. Under that and you can put on your bear suit. Resistance higher is found at 97, 100 and 108 before 115. Over that and the bulls will be prancing. But neither looks to be happening real soon. Continued Consolidation.

Natural Gas, $NG_F

Natural Gas consolidated the move from April and held over the 50 month SMA, within the channel from 2010 to 2011. The RSI is trending higher with the MACD rising, both supporting more upside. There is resistance higher at 4.87 and 5.80 with a move over each getting a few more bulls to join in. Support lower comes at 3.87 and 3.33 followed by 2.83. Under 3.33 turns bearish as it breaks the long term rising trend support again. Continued Upward Price Action.

Currency & Debt

US Dollar Index, $DX_F

The US Dollar Index consolidated over the mid line of the symmetrical triangle for the third month, with a probe higher. The RSI is holding over the mid line and the MACD is rising, both supporting more upside price action. There is resistance at the top rail at 85.75 and then 87.60. over that is very bullish and has a target on the triangle break to 106.50. Support lower is found at 81.28 and then the bottom rail at 79.50. Consolidation with an Upward Bias.

US Treasuries, $TLT

US Treasuries, as measured by the ETF $TLT, printed a bearish engulfing candle for May with a new 12 month low. This was a rejection off of the Median Line of the Andrew’s Pitchfork and it is supported for more downside price action from a falling RSI that is making new 2 year lows and a MACD that is running lower. Volume is picking up as well. There is support lower at 109 and 104 followed by 99.50 and 92.40. A move under 109 is very bearish. Resistance higher is found at 118 and 123.50 followed by 127.25. Over 127.25 and it has a target higher to 132. Consolidation with a Downward Bias.

Foreign Markets

Shanghai Stock Exchange Composite, $SSEC

The Shanghai Composite moved back up higher from the bull flag in May, but still has room in the downtrending channel. The RSI is trying to break higher but struggling with the mid line as the MACD is flat. There is resistance higher at 2470, also the top rail of the channel, and then 2980. Support lower is found at 2200 and 200, under 200 turns thing back to strong bearish. Continued Upside in the Downtrend.

German DAX Composite, $DAX

The German DAX finally pierced the 13 year resistance and made new all time highs. This creates a target on the ascending triangle break to 13920. The bearish Deep Crab has a Potential Reversal Zone at 11,000 along the way. The RSI is rising and bullish and the MACD is also rising, both supporting more upside. There is support now at 8170 and 7585 below. Continued Uptrend.

iShares MSCI Emerging Markets Index, $EEM

Emerging Markets, as measured by the ETF $EEM, moved lower in May but held over the 20 month SMA. The RSI is hovering around the mid line but moving lower with a MACD that is flat but also moving lower. There is resistance at 45.50 and the 50, and a move over that would be very bullish. Support lower is found at 36.20 and 34.10 with a move under that very bearish. Until then though sideways is the path. Consolidation with a Downside Bias.

US Equity Markets

VIX, $VIX

The Volatility Index ticked up in May but stalled at the long term support/resistance level at 16.45. A big move higher but the absolute level is still very low. The SMA’s continue to point lower and all are above. Resistance over 16.45 comes at 18.50 and then it moves over the SMA’s at 22. That is when trouble can begin. Support lower is found at 12.40 and 10. Continued Low Volatility.

SPY, $SPY

The SPY pushed to new all-time highs, over the mid-line between the Median Line and the Upper Median Line of the Andrew’s Pitchfork. It did pullback from the highs a bit but has held well over that mid line. Continuation should lead to attraction to the Upper Median Line eventually. That would be very bullish. The RSI is bullish but moving into technically overbought territory with a MACD that is rising. Both support more upside price action. The Bollinger bands are opening higher, but there is that upper shadow in May. There is no resistance higher but a 127% extension takes it to 182. Support is found below at 158 and then 141.40. Continued Upside.

IWM, $IWM

The IWM also pushed to new all-time highs, as it rises over the Median Line of the Andrew’s Pitchfork. The move higher negated a possible Hanging Man reversal from last month. Continuation should lead to attraction to the Upper Median Line eventually. That would be very bullish. The RSI is bullish but moving into technically overbought territory with a MACD that is rising. Both support more upside price action. The Bollinger bands are opening higher as it rises. There is no resistance higher but a 161.8% extension takes it to 108. Support is found below at gap at 85.80 and 84.25 followed by 73.50. Continued Upside.

QQQ, $QQQ

The QQQ pushed to new 12 year highs, as it rises along the Median Line of the Andrew’s Pitchfork. The move higher takes it over the 23.6% retracement of the Dotcom crash for the first time. The RSI is bullish but moving into technically overbought territory with a MACD that is very slowly rising. Both support more upside price action. The Bollinger bands are guiding it higher as well. There is resistance higher at 81.70-83 and then 101.16, the 38.2% retracement. Support is found below at 65 and 60. This is the strongest index ETF. Continued Upside.

The monthly outlook suggests the upside for Gold will continue while Copper may continue to drift. Crude Oil is also set up to continue to consolidate as Natural Gas moves higher. The US Dollar Index Looks stuck in the tightening triangle with US Treasuries biased to break the long consolidation to the downside. The Shanghai Composite looks better to the upside but not nearly as strong as the German DAX while Emerging Markets look to continue to move lower. Volatility can go either way but looks to remain low keeping a tailwind at the backs of the Equity Index ETF’s. The Equity Index ETF’s themselves, SPY, IWM and QQQ are set up to continue higher in the coming months with the trend in the QQQ the strongest. Use this information to understand the long term trends in Equities and their influencers as you prepare for the coming months.

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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.

blog comments powered by Disqus