Macro Week in Review/Preview April 15, 2011

Last week’s review of the macro market indicators looked for continued moves higher in Gold and Crude Oil as well as continuations lower for both the US Dollar Index and US Treasuries. The Shanghai Composite should continue its run higher but the Emerging Markets may need to consolidate before further upside. The Volatility Index should remain tame. The Equity Index ETF’s all show signs of a potential pullback or consolidation with the QQQ looking the strongest and the IWM the weakest.

The week began with both Gold and Crude Oil moving lower, although they both moved higher later in the week. US Treasuries found a bottom and bounced while the US Dollar Index drifted lower. The Shanghai Composite moved higher while Emerging markets met resistance. Volatility drifted lower but Equity Indices also moved lower in a tight range before a better Friday. What does this mean for the week ahead? Let’s look at the charts.

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

Gold Daily,$GC_F

Gold Weekly,$GC_F

Gold fell to support at 1450 midweek and then rose with a vengeance to close the week at resistance near the extended trendline at 1488. Two long white candles with virtually no upper shadow suggest more upside. SO does the rising Relative Strength Index (RSI) and improving Moving Average Convergence Divergence (MACD) indicator on the daily chart. The weekly chart is also bullish with a rising RSI and MACD. There is nothing wrong on these two charts, expect it to continue higher toward resistance first at 1500 and then 1540 and 1550 next week.

West Texas Intermediate Crude Daily,$CL_F

West Texas Intermediate Crude Weekly,$CL_F

Crude Oil had a minor set back early in the week but was able to bounce back and recover most of its loses by Friday. The daily charts shows that the RSI has reversed higher again without breaking the mid line and the MACD is now leveling and starting to improve. The rising 20 day Simple Moving Average (SMA) provided support for the bounce and is helping to guide it higher. It did stop at some resistance on the daily chart at 110 but only after running a bullish Three Advancing White Soldiers candlestick pattern. The weekly chart shows a star at resistance of 113.50 after a run higher. The RSI is technically overbought but not excessively so and the MACD is increasing. Look for a bias to the upside next week with the possibility of consolidation between 104.82 and 110 or 113.50, but the longer term looks higher with the rising SMA’s pointing to 121.29 soon.

US Dollar Index Daily,$DX_F

US Dollar Index Weekly,$DX_F

The US Dollar Index continued its move lower and still looks like crap. On the daily chart the RSI is bouncing along the technically oversold line but has plenty of ability to fall further and the MACD is not influencing. The weekly chart adds a hint of a possible reversal with a doji print this week, but a clear and strong downtrend. The SMA’s, RSI and MACD all point to more downside and the expanding Bollinger bands (BB) are not going to get in the way. Look for it to continue lower next week with support in the 74.30-74.80 range and then 71.50 below.

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

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

US Treasuries, measured by the TLT, had a very good week rising right from the beginning and then printing a big gap and run Friday stopping at resistance of the 61.8% Fibonacci level at 92.72. On the daily chart the RSI is through the mid line and is now sharply rising and the MACD is crossing up bullishly. There is still overhead resistance on the daily chart from the area around the 50% Fibonacci retracement and the 200 day SMA both near 95.25-95.39. The weekly chart shows a bullish engulfing candle printed, vaulting back over the 20 week and 100 week SMA cross, within the long uptrend. The MACD on the weekly is increasing and the RSI is testing the mid line from below. Look for it to break free from the Fibonacci line and continue higher to the resistance area near 95 next week.

Shanghai Stock Exchange Composite Daily,$SSEC

Shanghai Stock Exchange Composite Weekly,$SSEC

The Shanghai Composite continued its trend higher but has found the first resistance level at 3050. The daily chart shows the next resistance at 3150 higher and the rising RSI and positive MACD support a move there if it can get through the resistance. The weekly chart shows the trend higher well but also show the stall as a doji right at the 23.6% Fibonacci level. The weekly RSI looks higher and the MACD is increasing, both supporting more upside. Look for next week to continue higher with a possibility of some consolidation around the 3050 level.

iShares MSCI Emerging Markets Index Daily,$EEM

iShares MSCI Emerging Markets Index Weekly,$EEM

Emerging Markets, measured by the EEM, rejected at resistance early in the week but found support above the previous support/resistance level of 48.78. The 20 day SMA is also rising to offer support for another run higher. The RSI bounced and is slightly rising, but the MACD is diverging, crossing negative, so perhaps some further consolidation is to come. The weekly chart also has some divergence in it with the RSI rolling lower and the MACD crossing positive. The price action also shows consolidation above the recent channel break out at 48.40. look for consolidation to continue next week with a bias to the upside if it breaks, There is support at 48.20 and 47.20 on the daily chart and resistance at 50.17 and 52 higher.

VIX Daily,$VIX

VIX Weekly,$VIX

The Volatility Index continues its move lower, making new 2 month lows and near previous support. The falling SMA on the daily chart show the trend is lower and the RSI is in agreement. The daily MACD is stalling though. The weekly chart shows a 3 year descending triangle pattern, now with three touches of the support rail at 15.67 and three lower highs. With the RSI hugging just under the mid line and the MACD near flat lined perhaps the support will hold this time as well. Look for the VIX to continue to be relatively low and stable in a range between 15.50 and 21.25 next week, with a slight bias for a break lower. Still a good environment for equities.

SPY Daily,$SPY

SPY Weekly,$SPY

The SPY continued it fall from the 134.11 high and found support near 130 before clawing back over the support/resistance line at 131.46. It has now printed a higher high and a higher low, suggesting the trend is now higher again. The RSI on the daily chart is curling up off of the mid line and the MACD is starting to improve. It is also back above the rising SMA’s. The weekly chart is a bit less bullish reflecting the down week. The RSI is pointing lower and the MACD is fairly flat. But in the bullish camp all of the SMA’s are sloping higher. Look for a continued hold over the 131.46 line and the short term SMA’s on both the daily and weekly chart next week to continue the move higher back towards the 134.11 high.

IWM Daily,$IWM

IWM Weekly,$IWM

The IWM also found support at an important support/resistance line at 81.57 and bounced higher. It has also printed a higher high and a higher low, suggesting the trend is higher again. The RSI on the daily chart is curling up off of the mid line fro IWM as well and the MACD is starting to improve. It is also back above the rising SMA’s. The weekly chart shows the RSI has been hugging the technically overbought line, solidly in bullish territory, with upward sloping SMA’s but a flat lined MACD. Look for a continued hold over the 81.57 line and the short term SMA’s on both the daily and weekly chart next week to continue the move higher back towards 86.

QQQ Daily,$QQQ

QQQ Weekly,$QQQ

The QQQ shows that it fell, but unlike the SPY and IWM, it did not bounce but rather consolidated the past week. There is also no pattern of a higher high and higher low. The trend on the QQQ is still sideways. The RSI and MACD offer lite guidance as they are both flat lined, but notice that the BB are squeezing on the daily chart, suggesting a move one way or the other soon. The weekly chart shows the continued consolidation above the 54.26 level and over the 20 week SMA. This chart is much more bullish looking with a rising RSI and flat MACD, but all the SMA’s are rising. Look for further consolidation next week for the QQQ with the uptrend on the weekly chart a key support. If the BB squeeze happens next week the bias is to the upside.

So next week looks for Gold and Crude Oil to continue higher with the possibility of further consolidation first for Oil. The US Dollar Index looks to continue lower while US Treasuries test resistance higher. The shanghai Composite may pause before moving higher and the Emerging Markets in a range. Low and subdued Volatility should continue creating a good environment for the equity indexes SPY, IWM and QQQ. Both the SPY and IWM look to be heading higher but the QQQ may need further consolidation. Use this information to understand the major trend and how it may be influenced as you prepare for the coming week ahead. Trade’m well.

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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.

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