Macro Week in Review/Preview March 31, 2012

Last week’s review of the macro market indicators saw as the last week of the first quarter of 2012 came around Gold going back to its old confusion, looking sideways in the intermediate term downtrend in the long term uptrend while Crude Oil consolidated in the 104.81-110 range with a bias higher. Both the US Dollar Index and US Treasuries were biased to the downside in the intermediate term but Treasuries might continue to rally short term. The Shanghai Composite looked to continue lower while Emerging Markets were at support and losing that would follow lower. The Volatility Index still had a harder road to move in the bias direction lower but showed no signs of rising anytime soon. These influencers created a backdrop for the US Equity Index ETF’s SPY, IWM and QQQ to continue to consolidate with in their bullish trends. Their charts tended to agree but for the week the SPY and QQQ showed signs that the pullback might continue.

The week began with Gold bouncing but staying in the recent range under 1700 moving mainly sideways while Crude Oil fell out of the range lower. The US Dollar moved lower and then consolidated while Treasuries continued to drift higher. The Shanghai Composite fell hard while Emerging Markets drifted lower to end the week. Volatility rose slightly but remained in its low range. The Equity Index ETF’s all gapped higher Monday only to fill those gap by Thursday with the exception of the ever-strong QQQ. What does this mean for the coming week? Lets look at some charts.

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Gold Daily, $GC_F

Gold Weekly, $GC_F

Gold tried higher but fell back as it hit the jumble of Simple Moving Averages (SMA) to end the week nearly unchanged. The daily chart shows a consolidation just above the bear flag from early March and with a Relative Strength Index (RSI) that remains bearish but is rising and a Moving Average Convergence Divergence (MACD) indicator that positive but very flat. The weekly chart shows the RSI holding bullish and turning back higher with a MACD that is diverging negative. The price remains in the bearish channel lower but holding onto support of the 50 week SMA. Support lower is found at 1620 and then 12570 and resistance higher at 1725 and 1775. Continued Bearish Intermediate Term within Bullish Long Term.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil broke eh consolidation range between 104.81 and 110 and ended the week near the low. The RSI on the daily chart is barely holding bullish and heading lower while the MACD is negative and growing more so. The weekly chart shows a break back below the Fibonacci level at 103.81 to support at 102.50 with a RSI that is bullish but falling and a MACD that is crossing negative. There is support lower at 97, 93 and 88 with resistance at the bottom of the range at 104.81 and then 110. Below 97 leads to questioning the uptrend. Short Term Bearish within the Uptrend.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index continues to pullback in the long term uptrend. The daily chart shows a bear flag just above the rising trend support but with a RSI that is trending lower and a MACD that is negative. The weekly chart shows the longer uptrend touching support with a RSI that is holding bullish but trending lower. The MACD remains negative on this time frame. Support lower comes at 78.50 and 78 followed by 77. Resistance on a bounce is found at 80.28 and then 82 and 83.13. Short Term Downtrend Continues within intermediate Uptrend.

iShares Barclays 20+ Yr Treasury Bond Fund Daily, $TLT

iShares Barclays 20+ Yr Treasury Bond Fund Weekly, $TLT

US Treasuries, as measured by the ETF $TLT, edged higher all week before giving it all up and more on Friday. The daily chart shows the RSI turning back after touching 50, never turning bullish while the MACD went positive but is fading. Consolidation continues on the weekly chart over the double bottom at 109.50. The RSI on this time frame continues to trend negative with the MACD continuing to grow more negative. Support is found at 109.50 and 104.50 before 100. Resistance above is found at 115 and 118.67 before 122. Downward Bias Remains.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite finally gave up its move higher falling back to support near 2230. The daily chart shows the RSI bearish and back near 30 with a MACD that is growing more negative. Both supporting more downside, and the expanding Bollinger bands area allowing for it as well. The weekly chart shows a near retest of the downward channel with a falling RSI and a MACD that is fading. It looks lower on this time frame as well. Support comes at 2168 and 2050. Resistance higher is found at 2320 and 2450. More Downside.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets, as measured by the ETF $EEM, continued consolidation in a descending triangle lower with a bottom at 42.54. The daily chart shows the RSI holding bullish over the 40 level with a MACD that is negative but holding. The bull flag on the weekly chart over support is prevalent with the 50 and 100 week SMA just below. The RSI continues to fall without touching bullish territory and the MACD is fading back to the zero line. Support below 42.54 comes at 41.40 and then 35.91. Resistance higher is at 44.27 and then 45 and 48.20. Continued Consolidation with a Downward Bias.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index continues to consolidate between 14 and 16 with a bearish RSI but a MACD that is positive and increasing on the daily chart. The weekly chart shows the consolidation clearly under the long term support/resistance at 15.67 with a RSI that is just now moving into bearish territory and an MACD that is negative, improving but looking at a glance as opposed to a cross. There is support lower at 12.40 and 10 with resistance higher at 18, 21.25 and 24. Continued Consolidation with a Downward Bias.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY gapped higher Monday only to fill the gap by Thursday with a hollow red candle and then continued higher Friday. The RSI remains bullish and is turning back higher with a MACD that is near flat lined on the daily chart. A bit of an upward bias. The 20 day SMA continues to be support. The weekly chart continues to climb the Fibonacci Fan line toward the 2007 high. The RSI on this time frame is bullish and rising with a MACD that is positive but stalling. There is resistance higher at 141.83 and 143.02 before a target of 161.97 as a Fibonacci extension. Support lower comes at 139 and 137.40. Continued Uptrend with a Possible Move to Neutral.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM also gapped higher Monday and filled the gap Thursday with a hollow red hammer candle. The RSI remains bullish but trending lower with a MACD that is about to cross negative on the daily chart. Neutral on this time frame. The 20 day SMA continues to be support. The weekly chart shows a push above the consolidation zone over 83.75 before pulling back in. The RSI on this time frame is bullish but flat with a MACD that is positive but fading. There is resistance higher at 83.75 and 85.80 before a target of 92.78 as a Fibonacci extension. Support lower comes at 81.57 and 80. Continued Consolidation.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ also gapped higher Monday but never filled the gap. The RSI remains bullish and has worked off the over bought condition is but trending lower with a MACD that has crossed negative on the daily chart. turning to neutral on this time frame. The weekly chart is showing signs of topping with longer upper shadows as it pushed to the target from the Diamond breakout at 69. The RSI on this time frame is bullish, growing but becoming overbought with a MACD that is positive but flat. Above the target at 69 is a Fibonacci extension at 71.46. Support lower comes at 67.21 and 66.32 before 59.80 Continued Upside with a Chance of Consolidation.

Heading into the new Quarter many of the influencers are looking better to the downside in the short term. Gold and Crude oil are biased lower with in their long term and intermediate term uptrends. The US Dollar Index is also looking lower in the short run within an uptrend while US Treasuries just look lower. The Shanghai Composite looks to continue lower with Emerging Markets neutral with a chance to break lower. Volatility looks to continue to be tame and possibly move lower. These influencers give a backdrop for the US Equity Indexes SPY, IWM, QQQ, to continue higher and their charts agree but not so strongly in the short run. The QQQ continues to look the best with the SPY next, looking better higher with a chance of consolidation while the IWM continues to move sideways. Use this information as you prepare for the coming week and trade’m well.

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