Macro Week in Review/Preview May 29, 2015

• Posted by Greg Harmon
• on May 29th, 2015

Last week’s review of the macro market indicators suggested, heading into the unofficial start of Summer the equity markets looked positive and better in the longer timeframe than the shorter one. Elsewhere looked for Gold to continue to hold near 1200 while Crude Oil consolidated with an upward bias. The US Dollar Index was biased to the upside but it was still too soon to declare a reversal higher while US Treasuries were biased lower but showing signs of consolidation. The Shanghai Composite was moving higher in renewed strength and Emerging Markets were biased to the downside in the uptrend, debating whether it was a bull flag or a reversal. Volatility looked to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts agreed with that on the weekly timeframe, but showed better strength on the SPY and QQQ on the daily timeframe than in the IWM.

The week played out with Gold probing lower under 1200 but quickly finding support while Crude Oil tested the consolidation zone but held and bounced. The US Dollar continued higher before a pause while Treasuries broke the downtrend, moving higher. The Shanghai Composite made another new 7 year high before pulling back while Emerging Markets took another turn lower. Volatility opened higher Tuesday but then stayed in a tight range all week. The Equity Index ETF’s all fell from their recent highs to start the week, with the SPY then consolidating, the IWM reclaiming some ground along with the QQQ, which also printed a new 14 year high close along the way. 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 clinging to 1200 but quickly moved lower Tuesday. After that it was as if the metal stopped trading for the week, as it stayed in a narrow $14 range over support. The daily chart shows the potential bear flag with the MACD running lower and the RSI trying to flatten and hold in the bullish zone. The weekly picture gives a better perspective: just more consolidation. The RSI is still unable to break above the mid line and the MACD is running sideways. There is resistance higher at 1200 and 1225 followed by 1245. Support lower comes at 1180 and 1140 followed by 1100. Continued Consolidation Near 1200.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil started the week heading lower as well. It found support at the bottom of the current channel and bounced higher. Friday’s candle closed at the top of the channel again. The daily chart shows the RSI moving back higher after touching the mid line and the MACD trying to level. On the weekly chart the price continues to hold near the upper Bollinger Band®, but sees them widening. The RSI on this timeframe is stalling in its rise through the mid line with the MACD rising. There is resistance at 62 and 66 before 69.50. Support lower comes at 58.50 and 57.50 followed by 56 and 54. Consolidation in Bull Flag with Upward Bias.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index continued higher Tuesday, but ended out of the Bollinger Bands. It pulled back in over the next 3 days in a bull flag as the RSI stalled on the edge of the bullish zone, and the MACD rising. This smells like a healthy pause before moving up. The weekly chart shows the RSI hit the mid line and bounced while the MACD is starting to turn. The price has also held over the rising 20 week SMA. There is resistance higher at 97.60 and 99 followed by 100 and 100.71. Support lower comes at 96 and 95.25 followed by 94. Continued Uptrend.

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

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

US Treasuries broke the down trending channel Tuesday and continued higher. They ended the week above the 20 day SMA, where they had not been since mid April. The daily chart shows the RSI now at the mid line as it settles, a critical area to clear if the uptrend will continue. The MACD is rising. Out on the weekly chart the strong move up confirms the double Hammer candles as a reversal. The RSI is turning up after touching the limit of the bullish zone, and still needs to prove itself while the MACD is falling. There is resistance higher at 123.50 and 124.40 before 126. Support lower comes at 122.50 and 120.25 followed by 118.50. Continued Bounce or Reversal in the Downtrend.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite started the week higher, inching up to 5000, but sold off hard Thursday. The Spinning Top doji Friday that touched the 20 day SMA and close back over the April high will give hope to the bullish crowd. The RSI has worked off the overbought condition while the MACD is heading lower, a mixed view on momentum. On the longer weekly chart the red candle did not do much for the overbought condition on RSI and the MACD is continuing higher. Looking back to 2008 it is still short of filling the gap at 5040. There is resistance higher at 4750 and 4818 now, followed by 5040. Support lower comes at 4530 and 4420 followed by 4220. Possible Pullback in the Uptrend.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets started the week moving lower out of consolidation and ramped that up into Friday. The strong down day ended the week back at the breakout level from April. The daily chart shows the RSI heading lower and into the bearish zone with the MACD continuing down. These portend more downside. The weekly chart shows a bearish Marubozu candle driving to the 20, 100 and 200 week SMA zone. The RSI on this timeframe is continuing lower after rejecting at the bullish limit while the MACD is turning down. There is support lower at 41 and 40.70 followed by 40.40 and 39.70. Resistance higher comes at 42.54 and 43 followed by 44 and 45. Continued Downward Price Action.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index jumped Tuesday, but only into the low teens and then spent the week there. Sensationalists will talk about the 14% move higher, but remember it is in an index and only moved 2 points. The daily chart shows it did not even touch the 100 and 200 day SMA area just over 15 with the RSI at the mid line and the MACD looking higher. The weekly chart shows the 20 week SMA containing the upside while the RSI did not even touch the mid line and the MACD is flat. There is resistance at 15.67 and 18 followed by 22 and 24. Then you can start to worry. Support lower comes at 12.40 and 10. Continued Low Volatility.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY started the week pulling back under the 212.50 breakout level and running lower. A failed breakout thus far. It found support at the 20 day SMA and bounced Wednesday back to the break out area where it held Thursday with a doji candle. Friday saw another move lower to the 20 day SMA where it ended the week. In all a tight range but lower and importantly under the breakout level. The RSI on the daily chart pulled back but is holding at the mid line in the bullish zone while the MACD is crossing down. These would support more downside. The weekly chart shows last week’s break out, but as a possible Evening Star reversal candle, that was confirmed lower this week. The momentum picture on this timeframe is similar to the daily one, with the RSI at the mid line and the MACD about to cross down. There is resistance higher at 212.50 and 213.78 with a Measured Move to 216.50 and then 221 above. Support lower comes at 211 and 210.25 followed by 209 and 208. Consolidation in the Long Term Uptrend with a Short Term Downside Bias.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM started the week pulling but recovered by Wednesday. It remained in a tight range the rest of the week over the 20 day SMA. The RSI on the daily chart pulled back and is holding at the mid line in the bullish zone while the MACD is crossing down. The weekly chart shows a continued creep along the 20 week SMA, in what could be a bear flag. The RSI is firmly in the bullish zone but falling toward the mid line and the MACD is moving lower. There is resistance higher at 125 and 126.25 followed by 127.13. Support lower comes at 123.50 and 122 followed by 120 and 119. Consolidation.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ was a mix of the SPY and IWM starting the week pulling back to the 20 day SMA and bouncing. the bounce made a new 14 year high Wednesday but then it fell back slightly the rest of the week. The RSI on the daily chart pulled back but is holding at the mid line in the bullish zone while the MACD is heading towards a cross down. The weekly chart shows a doji, indecision. The RSI is strong and bullish while the MACD is curling up. There is resistance higher at 111 and 115 followed by 117.56. Support lower comes at 110 and 109.40 followed by 109 and 108.40 before 107.75. Possible Consolidation in the Long Term Uptrend.

Heading into June the equity markets are mixed, with the QQQ strong but the SPY and IWM showing some short term weakness. Elsewhere look for Gold to continue to hold between 1180 and 1200 while Crude Oil consolidates with an upward bias. The US Dollar Index looks to continue higher while US Treasuries also are looking stronger, possibly breaking their downtrend. The Shanghai Composite is in pullback mode in the uptrend but at a good support level, while Emerging Markets are falling and look weak. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts are a bit mixed, with all better on the weekly timeframe than the daily, and the QQQ’s the strongest short term while the SPY and IWM may pullback. Use this information as you prepare for the coming week and trad’em well.

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