Macro Week in Review/Preview July 24, 2015

• Posted by Greg Harmon
• on July 24th, 2015

Last week’s review of the macro market indicators suggested, heading into the week that the thermometer was getting hotter and so were the equity markets with the QQQ leading the charge. Elsewhere looked for Gold to continue lower along with Crude Oil. The US Dollar Index was breaking out higher and US Treasuries might be ready to reverse higher as well. The Shanghai Composite and Emerging Markets were both reversing higher and the week might determine if it is a Dead Cat Bounce or the real deal. Volatility looked to remain subdued and with a bias lower building a tailwind behind the equity index ETF’s SPY, IWM and QQQ. The QQQ looked very strong as it approached the all-time highs of 2000 while the SPY was also strong and on the edge of a break out. The IWM looked the weakest as it moved sideways in a new consolidation.

The week played out with Gold continuing lower looking like a solid breakdown while Crude Oil trended lower all week as well. The US Dollar moved slightly higher before retesting the breakout while Treasuries did reverse higher printing a higher high. The Shanghai Composite pushed higher, breaking above consolidation, the real deal, while Emerging Markets reversed lower, the Dead Cat Bounce. Volatility made a new low for the year before rebounding slightly into the teens. The Equity Index ETF’s started the week mixed but ended worse, with the SPY and QQQ making new higher highs and the QQQ a new 15 year high, before pulling the rest of the week. The IWM was similar but without the Monday good news. 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 bolting lower and then continued down in a slow drift. After nearly two years of consolidating the first leg lower is this the start of the second? The daily chart shows the break down under 1140 with the Bollinger Bands® opening to allow it head lower. It also shows the RSI in oversold territory, but moving sideways while the MACD is making new lows as it heads down. On the weekly chart there is a solid hard breakdown. with the Bollinger Bands opening as well. The RSI on this timeframe is heading lower in the bearish zone while the MACD is just starting to turn down. There is support lower at 1045 and 1000 with a Measured Move to 850 below. Resistance higher may come at 1100 and 1140 followed by 1180. Downtrend Continues.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil fell out of a consolidation channel to end the prior week and just continued lower this week. The breakdown targets a move to 45.50. The daily chart shows the RSI cruising along the oversold line in bearish territory while the MACD is falling. Both support more downside. The weekly chart looks even worse. The entire move up to 60 now looks like a Dead Cat Bounce and the reversal targets a move to $5. Wowzers! The RSI on this timeframe is heading lower in the bearish zone as well with the MACD about to cross down. There is support at 48 and 45 followed by 44.20 and 42.40 before 37.75. Downtrend Continues.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index broke out of a long symmetrical triangle recently and pulled back to retest the breakout level this week. The daily chart shows the RSI pulling back but remaining in the bullish zone with the MACD approaching a cross down. On the weekly chart the candle shows a higher high with a RSI rising and bullish and a MACD turning to cross up. There is resistance at 98.30 and 99 followed by 100 and 100.71 with the target on the triangle break at 104.50 above. Support lower comes at 97 and 95.25 before 94. Short Term Pullback in Renewed Uptrend.

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

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

US Treasuries shook off last weeks rejection at resistance and pushed higher, ending at a new 7 week high. The daily chart shows break of the consolidation area with support for more upside from the RSI moving above 60 into the bullish zone and the MACD rising. On the weekly chart the strong candle is nearly a Marubozu with support for more as well. The RSI is pushing up to the mid line while the MACD is turning up towards a cross up. There is resistance at 122.50 and 123.50 before 124.40 and 126. Support lower may come at 120.25 and 118.50 before 117.50. Reversal Higher.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite started the week at the 38.2% retracement of the leg higher from last summer, and the 20 day SMA. By Tuesday it was above both and heading back to 4000. The 20 day SMA has been a key indicator of whether the Composite is rising or falling. The daily chart shows the RSI back at the mid line, ready for a test of the bullish move so far, while the MACD is rising. On the weekly chart the price action looks much stronger. The RSI on this timeframe held at the mid line and is reversing higher, having never moved out of bullish territory, while the MACD is falling still. There is resistance above at 4220 and 4420 followed by 4530 and 4750. Support below may come at 4000 and 3875 followed by 3750. Bounce Continues, Looking for Confirmation of Reversal.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets showed that the bounce off of the early July low was a Dead Cat Bounce by resuming lower. By the end of the week the price was nearly back at that low with a Measured Move lower to 34.40 as a target. The daily chart shows the RSI turning back lower and in the bearish zone while the MACD is about to cross down. On the weekly chart the RSI is also bearish and falling with the MACD falling. More downside from both pictures. There is support lower at 36 and below that breaks a long channel with 35 support lower. Resistance comes at 38 and 39 before 39.65 and 40. Continued Downtrend.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index started the week at the lows of the year, and really did not move much. The daily chart shows the push higher touching the SMA’s and a pullback. The RSI is heading toward the mid line while the MACD is turning toward a cross up. The weekly chart shows a hold in the lower range under the 15.67 level. The RSI on this timeframe is hanging near the mid point while the MACD is flat. There is support lower at 12.40 and 10, while resistance above stands at 15.67 and 18 before 22. Continued Low Volatility.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY started the week on a positive note, pushing up through the resistance zone at 212.50 and near the all-time highs. But that did not even last a day. The end result of Monday was a Solid Black Spinning Top candle. The solid black showing the downward intraday bias despite an up day, and the spinning top the indecision. This resolved Tuesday to the downside and then continued the rest of the week, with longer accelerating candlestick. Both of the gaps from the recent upward move were closed along the way. Also note that the price action ended up making a lower high to go with the lower low to start July. The RSI on the daily chart turned back as it touched the edge of the bullish zone while the MACD is curling down looking for a cross down. A bit bearish on this timeframe. The weekly chart shows a bearish engulfing candle, but still in the top of the long consolidation zone since October. The RSI continues to hold in the bullish zone over the mid line while the MACD retraces lower. The Bollinger Bands® are getting tighter too. There is support lower at 206.40 and 205.25 before 204.40 and 203. Resistance above now stands short term at 209 and 210.25 followed by 211 and longer term at 212.50 and 213.40. Pullback in the Intermediate Consolidation in the Long Term Uptrend.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM started the week to the downside and just continued the rest of the week. It ended the week at the prior low, a possible double bottom. Both of the gaps from the recent upward move were closed along the way. The RSI on the daily chart turned back as it edged over the mid line while the MACD is crossed down and falling. The weekly chart shows a bearish Marubozu candle, but still above the top of the long consolidation zone. The RSI continues to hold in the bullish zone but is crossing down through the mid line while the MACD moves lower. The Bollinger Bands® are getting tight and price is sitting on the lower Band. There is support lower at 120 and 119 before 118 and 115.50. Resistance above now stands at 123.50 and 125 followed by 126.25 and 127.13 before 129. Testing Consolidation Zone in the Long Term Uptrend.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ started the week making a new 15 year high before gapping lower Wednesday and then continuing lower later in the week. The pullback was mild compared to the SPY and IWM. The RSI on the daily chart turned lower but is firmly in the bullish zone while the MACD is curling down. The weekly chart shows a pullback to the top of the prior resistance zone, now acting as support. The RSI continues to hold in the bullish zone over the mid line while the MACD tries to push higher towards a cross. The Bollinger Bands® are opening higher on this one. There is support lower at 111 and 110 followed by 109 and 107.75 before 106. Resistance above now stands at 113 and 114 followed by 115 and 117.88, the last two from the 2000 tech bubble. followed by 211 and longer term at 212.50 and 213.40. Pullback in the Long Term Uptrend.

Heading into the last week of July the equity markets are a bit weaker but mixed with the tech names the strongest. Elsewhere look for Gold to continue lower along with Crude Oil. The US Dollar Index may move sideways or continue higher while US Treasuries are biased to the upside. The Shanghai Composite is looking stronger and has almost dispelled all possibility of a Dead Cat Bounce while and Emerging Markets are confirming the resumption of the move lower. 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 longer timeframe. The QQQ is the leader on the weekly timeframe with the IWM next and then the SPY. On the shorter timeframe the QQQ’s are also looking the strongest with the SPY and IWM worse, but all biased lower short term. Use this information as you prepare for the coming week and trad’em well.

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