Macro Week in Review/Preview March 13, 2015

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

Last week’s review of the macro market indicators suggested, heading into the new week that the equity markets looked vulnerable. Elsewhere looked for Gold to continue lower while Crude Oil churned in a consolidation zone. The US Dollar Index looked to continue higher while US Treasuries continued lower. The Shanghai Composite looked to continue its broad consolidation with a short term downside bias and Emerging Markets were biased to the downside. Volatility looked to remain low keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts looked better to the downside though with the SPY the weakest and the IWM and QQQ a bit stronger on the longer timeframe.

The week played out with Gold continuing lower but at a slower pace while Crude Oil finally broke he consolidation to the downside. The US Dollar showed continued strength as it moved higher while Treasuries found found support and bounced. The Shanghai Composite continued the drift up in consolidation ending near resistance while Emerging Markets moved lower. Volatility continued the rebound but stayed short of a breakout. The Equity Index ETF’s continued their moves lower but then diverged mid week with the QQQ continuing lower while the IWM bounced, while the SPY found support and settled. 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 drifting lower and continued til Friday. The pace of the move lower slowed but straight down. The daily chart shows the leaking lower, like a falling pennant, with a slight bounce Friday. The pennant is often an exhaustion of trend signal so not a time to press shorts. Look for volume to increase first. The RSI on this timeframe started back higher as it hit oversold territory while the MACD continues lower. The weekly chart shows price nearing the prior support at 1140, but with the RSI falling and the MACD avoiding a cross up, continuing lower. There is support at 1140 and 1100 followed by 1045. Resistance higher comes at 1180 and 1200 before 1225. Continued Downward Price Action.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil started the week heading to the bottom of the consolidation range from the start of February. With a Hammer printed Wednesday, it seemed it might bounce again. But Thursday saw it continue lower, under the range, and followed through Friday. The daily chart shows the RSI moving lower towards the oversold line with the MACD falling. On the weekly chart the strong week lower breaks a bear flag and targets a move down to near zero. Not gonna happen. The RSI on this timeframe reversed lower in oversold territory while the MACD has crossed up. There is support lower at 44 and then 40 and 37.75. Resistance higher comes at 47 and 48.50 followed by 50 and 52.50. Continued Downward Price Action.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index continued the move higher, tagging the 100 level before the weeks end. The topping candle Friday pulled back into the Bollinger Bands®, but it remains well extended from the 20 day SMA> Look for some consolidation or a pullback before further advancement. The RSI on the daily chart remains overbought, but moving sideways, as the MACD is rising. On the weekly chart the spike up remains out of the Bollinger Bands with the RSI well into the overbought territory. It has been overbought for 7 months though so don’t count on a reversal. The MACD continues to climb as well. There is resistance at 102 above and support lower stands at 99 and 96 followed by 95.25 and 94. Possible Consolidation in the Uptrend.

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

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

US Treasuries started the week holding the gap down, but gapped back higher Tuesday, creating an Island Bottom. The res of the week held the gap up over support. The RSI on the daily chart popped with the move but failed to reach the mid line and fell back after making a lower high. The MACD is trying to cross up. On the weekly chart the pullback from the AB=CD pattern continues, but with an inside week. The RI is holding over the mid line on this timeframe while the MACD is falling. There is support lower at 126 and 124.40 followed by 123 and 121.80. Resistance higher now comes at 127.50 and 130 followed by 132.50. A move lower Monday carries a Measured Move to 121. Continued Pullback.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite started the week with a strong move up off of the 20 day SMA. It paused for two days and then continued towards the recent resistance at 3420. The daily chart shows a Measured Move to about 3500. The RSI is making a higher high as it moves up in the bullish zone while the MACD is rising as well. Bullish. The weekly chart shows a bullish engulfing candle. The RSI on this timeframe is holding at the overbought line with a MACD flattening after a pullback. There is resistance at 3420 and 3480 followed by 3750. Support lower comes at 3360 and 3280 followed by 3160. Watch for Consolidation to Resolve to the Upside.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets started the week falling, continuing the action from the prior week, before finding support and a small bounce. The week ended back at the low though with the Bollinger Bands opening to the downside. The RSI shows a small bounce off of the oversold levels failing and turning back lower while the MACD continues down. The weekly chart is ugly as well. The second long red candle suggests a break of the bear flag and a target lower now of 37 or lower. The RSI on this timeframe is bearish and falling with a MACD about to cross down. 37 may not be enough. There is support lower at 38 and 37 followed by 36. Under that and a 3 and a half year channel is broken. Resistance higher comes at 39.25 and 39.65 before 40.40 and 40.70. Continued Downward Price Action.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index continued higher on the week but without a spike over the 50 day SMA. The move up continues the series of higher lows since July but without adding any real fear. The daily chart shows the RSI holding around the mid line while the MACD continues to rise. The weekly view shows the rounding up with the RSI still at the mid line and the MACD actually pointing lower. There is resistance at 18 and 22 followed by 24 and 30. Support lower is at 15.67 and 12.40 before 10. Continued Low Volatility with an Upward Drift.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY started the week with a small body candle holding inside last Friday’s and over support, giving hope for a reversal. But the gap down Tuesday ended that and follow through Wednesday tagged the 100 day SMA. The rest of the week held in that area, closing the gap Friday with an inside real body. The daily chart shows a RSI turning back lower but holding onto the edge of bullish zone while the MACD continues lower. Unclear from this view if this is a looming bear flag or consolidation for a reversal higher. If it continues higher a Positive RSI Reversal would target a move up to 218.78. The weekly chart shows a move back into the consolidation box with the Bollinger Bands® tightening. The RSI on this timeframe remains bullish and over the mid line, but pulling back, while the MACD has crossed down. These support more downside. There is support lower at 204 and 203 followed by 202 and 200 before 198.60. Resistance higher stands at 206.40 and 209 followed by 210.25 and 212.25. Short Term Consolidation with Downward Bias in the Long Term Uptrend.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM started the week with the same small body candle holding inside last Friday’s and over support, giving hope for a reversal. But it also gapped down Tuesday and held there Wednesday. But then it jumped Thursday making an Island Bottom leaving a small gap with the lower shadow Friday. The daily chart shows a RSI rising after testing the mid line and holding in the bullish zone while the MACD stopped falling. A Measured Move higher would now target 128 should it continue up. The weekly chart shows price holding over the consolidation box with the Bollinger Bands® tightening. The RSI on this timeframe remains bullish and slightly rising, while the MACD is rising. These support more upside. There is support lower at 121 followed by 120.40 and 119 before 118 and 116. Resistance higher stands at 123.50. Short Term Consolidation with Upward Bias Possibly Renewing the Long Term Uptrend.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ started the week with a small body candle holding inside last Friday’s and over support too. But it gapped down Tuesday and continued lower. The inside candle Friday at the lower Bollinger Band will have some looking for a bounce next week. The daily chart shows a RSI bouncing over 40 and holding in the bullish zone while the MACD continues lower. The weekly chart shows a move back towards the rising trend support and 20 week SMA with the Bollinger Bands tightening. The RSI on this timeframe remains bullish and over the mid line, but pulling back, while the MACD is crossing down. These support more downside. There is support lower at 104 and 103 followed by 102 and 100 before 99. Resistance higher stands at 106.25 and 107.75 followed by 109.40. Short Term Consolidation with Downward Bias in the Long Term Uptrend.

Heading into the March Options Expiration week the equity markets are a bit mixed, mostly better looking to the downside. Elsewhere look for Gold to continue lower along with Crude Oil next week. The US Dollar Index may consolidate in the uptrend but has a clear bias higher while US Treasuries are biased lower. The Shanghai Composite is trying to break consolidation to resume the uptrend while Emerging Markets are biased to the downside still. Volatility looks to remain subdued but above the low range of the early 2014 keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, but with the wind easing at their backs. Their charts all are consolidating in the short run with the bias to the upside for the IWM while to the downside for the SPY and QQQ. The long term uptrend remains in tact for each though. Use this information as you prepare for the coming week and trad’em well.

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