Macro Week in Review/Preview February 13, 2015

• Posted by Greg Harmon
• on February 13th, 2015

Last week’s review of the macro market indicators suggested, heading into the week that the equity markets were coming off of a good rebound higher but showed signs of exhaustion Friday. Elsewhere Gold looked to continue to pullback while Crude Oil tried to move higher off of a bottom. The US Dollar Index might continue to consolidate the rise, pulling back mildly, while US Treasuries were biased lower in their uptrend. The Shanghai Composite looked to continue its pullback from a major run higher and Emerging Markets continued to consolidate in a bear flag in their downtrend. Volatility looked to remain low but slowly rising slowing the wind behind equities to move higher. The equity index ETF’s SPY, IWM and QQQ, were all in a consolidation pattern in the intermediate term, despite the moves higher last week. The IWM looked the strongest and ready to test the all-time highs this week while the SPY was close behind but the QQQ a bit weaker.

The week played out with Gold continuing lower before a small bounce Friday while Crude Oil held another test of support in its bull flag. The US Dollar did continue the sideways consolidation while Treasuries continued down to new 6 week lows. The Shanghai Composite reversed back higher, in what could be a bear flag, while Emerging Markets looked messy in a tight range. Volatility made a new 2015 low as it neared a critical level. The Equity Index ETF’s saw this as good news, with the SPY and IWM making new all-time closing highs and the QQQ 14 year highs. 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 started the week under the resistance zone and proceeded lower. After a touch at the 100 day SMA on Thursday it tried to bounce Friday but could not get back over the 50 day SMA. The daily chart shows the RSI touched a new lower low while the price did not, setting up a possible Positive RSI Reversal. This would target 1340 to the upside. But the RSI is still trending lower with a falling MACD so the bottom may not be in yet. The weekly chart shows a tight candle at the bottom of last week’s candle but holding over the 20 week SMA. The RSI on this time frame is pulling back to the mid line while the MACD levels after a rise. There is support lower at 1225 and 1180 followed by 1160 and 1140. Resistance higher comes at 1245 and 1275 before 1300. Continued Short Term Pullback in the Consolidation.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil spent the week moving sideways between the 20 and 50 day SMA’s. It is building a bullflag, and maybe more importantly sustaining the move higher off of 43.50. The daily chart shows the RSI also held over the mid line but could not penetrate the bullish zone over 60. The MACD is rising. The weekly chart is a bit less optimistic, showing a couple topping tails. The RI on this timeframe remains oversold while the MACD is ready for a cross up. There is resistance higher at 52.75 and 54 followed by 55 and 57.50. Support lower stands at 50 and 47 followed by 44.50. Consolidation with Possible Reversal Higher.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index made another attempt to break above 96 but was thwarted. The week ended with it back at the 20 day SMA, in the consolidation. The daily chart shows the RSI still very bullish and moving sideways while the MACD continues to fall. The weekly picture shows consolidation after a strong move higher continuing. The RSI is working lower but still overbought while the MACD is continues higher. There is resistance at 95.25 and 96 before 99. Support lower stands at 94 and 93.60 before 92. Continued Consolidation in the Uptrend.

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

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

US Treasuries continued their move lower. It looked for a few days that the 50 day SMA may act as support but Friday it blew through to the downside. The daily chart shows the RSI making a 5 month low as it continues into the bearish zone while the MACD falls with the Bollinger Bands® opening lower. Friday marked the first close under the 50 day SMA since September 24th, ugly. The weekly chart looks ugly too. With two strong moves lower following the AB=CD target it looks to continue to the downside. The RSI remains in the bullish zone but is falling while the MACD is turning down and about to cross down. There is support at 127.5 and 126 followed by 124.40 and 123. Resistance higher stands at 130 and 132.50 followed by 133 and 134. Continued Downward Price Action.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite moved higher all week, up to the falling 20 day SMA. The RSI on the daily chart has made a higher high so a price reversal here at the 20 day SMA, as it has recently, would trigger a Negative RSI Reversal lower with a target of 3025. The MACD though is turning higher, towards a positive cross. A mixed bag. The weekly chart shows the move back to the 2010 resistance levels. The RSI on this timeframe has worked off the technically overbought condition
while the MACD is turning lower, but leveling, and may avoid a cross down. There is resistance at 3280 and 3360 followed by 3420. Support lower comes at 3160 and 3055 followed by 2915. Pullback in the Uptrend Continues.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets made third marginally higher low to start the week before moving back higher, over the 100 day SMA for the first time since September 18th. The daily chart shows a RSI holding over the mid line with the MACD about to cross up as it has been trending lower. A mixed bag. The weekly chart shows consolidation in a bear flag. The RSI on this timeframe is trying to break the mid line while the MACD is about to cross up. Maybe a signal that it will continue higher. There is resistance at 41 and 42.54 and a move over that would change the trend to higher. Support lower stands at 39.65 and 39.25 followed by 38 and 37. Consolidation Watching for a Reversal Higher.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index pulled back on the week, closing just above the 200 day SMA. This is the last SMA below and a move under it would trigger the 17th signal for anew all-time high in the S&P 500 (a little late as it happened Friday). The daily chart shows the RSI turning lower while the MACD falls. The weekly chart shows the rounding bottom continues with the VIX at the SMA jumble. The RSI is near the mid line and falling while the MACD is about to cross down. There is support at 12.40 and 10, with resistance at 15.67 and 18 before 22 and 24. Continued Low Volatility, Drifting Lower.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY ended last week at the 50 day SMA with a Spinning Top doji, and Monday confirmed it higher. This also confirmed a break of the range since the start of the year. The rest of the week continued higher with Thursday a new all-time high close and followed up with another on Friday. The Bollinger Bands® have opened higher allowing the move to continue on the daily chart as the 20 day SMA turns up. The RSI on this timeframe is making a two month high as it continues into the bullish zone over 60. The MACD is also pointing higher. Moving out to the weekly timeframe sees the strong candle piercing the consolidation zone that has held the SPY since late October. The RSI is making a marginally higher high and rising. It never left the bullish zone. The MACD is about to cross up, also supporting more upside price action. There is resistance (maybe) at the spike to 212.97 with a Measured Move to 224 above. Support lower may come at 209 and 206.40 followed by 204.30. Continued Upward Price Action.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM ended last week consolidating the break of the Diamond and Thursday finally confirmed it higher. This also made for a new all-time high close Friday. The Bollinger Bands® have opened higher here too. The RSI on this timeframe is drifting higher as it continues into the bullish zone over 60. The MACD is also pointing higher. Moving out to the weekly timeframe sees the strong candle piercing the consolidation zone that has held the IWM since November 2013. It did break once and fail before so follow through next week while be important. The RSI is turning higher just into the bullish zone. The MACD avoided a cross down, and is moving higher. There is no resistance higher but a Measured Move to 123 and then 130 above. Support lower may come at 120 and 119 followed by 118 and 116. Continued Upward Price Action.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ started the week with a doji, and Tuesday confirmed it higher. This also confirmed a break of the falling channel since late December. The rest of the week continued higher with Friday a new 14 year high close. The Bollinger Bands® have opened higher here as well but price has moved above the upper band, making it a bit extended short term. The RSI on this timeframe is making a two month high as it continues in the bullish zone while the MACD points higher. Moving out to the weekly timeframe sees the strong candle moving higher out of the bull flag. The RSI is making a marginally higher high and rising. The MACD is turning towards a cross up, also supporting more upside price action. There is resistance at 109 from 2000 with a Measured Move to 115.40 above. Support lower may come at 106.25 and 105 followed by 104 and 103 before 101 and 100. Continued Upward Price Action.

Heading into a shortened February Options Expiration week the equity markets look strong, breaking long consolidations to the upside. Elsewhere look for Gold to lower in the short term in the longer consolidation while Crude Oil consolidates, and may be ready to reverse higher. The US Dollar Index looks to continue in a consolidation range while US Treasuries are biased lower. The Shanghai Composite looks to continue to pullback in the uptrend and Emerging Markets look to hold in the bear flag, and might prove it a reversal higher. Volatility looks to remain subdued and now drifting lower, keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts all look strong on both the daily and weekly timeframes. If you had to pick a weakness then the gaps in the QQQ chart and move out of the Bollinger Bands® may signal short term exhaustion not seen in the SPY and IWM. Use this information as you prepare for the coming week and trad’em well.

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