Macro Week in Review/Preview August 14, 2015

• Posted by Greg Harmon
• on August 14th, 2015

Last week’s review of the macro market indicators suggested quiet, heading into the week with news and earnings dry up. And Equities could use some quiet time to steady themselves. Elsewhere looked for a possible bounce out of Gold in its downtrend while Crude Oil continued lower. The US Dollar Index looked to continue consolidation with an upward bias while US Treasuries continued higher. The Shanghai Composite remained in broad consolidation in the pullback while Emerging Markets looked like they may break a 6 year range to the downside. Volatility looked to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the moves lower the prior week. Their charts showed further short term weakness possible but the Hammer candles could confirm a short term bottom. On the longer timeframe the IWM remained weakest with the SPY consolidating and the QQQ looking strong.

The week played out with Gold starting higher, moving back over 1100 while Crude Oil continued to the downside. The US Dollar moved slightly lower in consolidation while Treasuries continued the trend higher. The Shanghai Composite pushed slightly higher while Emerging Markets broke a six year channel to the downside. Volatility held a tight range, little changed on the week. The Equity Index ETF’s started the week well but gave up the gains immediately, ending the week little changed from last Friiday. 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 continuing higher. But it quickly petered out as it hit the upper Bollinger Band® and fell back. It ended the week back over 1100 though. On the daily chart the RSI reversed before moving into the bullish zone, but the MACD is rising. Maybe a bull flag, or just an Dead Cat Bounce. The weekly view shows a candle rising, confirming the lower shadows from the past few weeks as reversal indicators. The RSI on this timeframe is starting up off of the oversold level and the MACD is stopping its fall. There is resistance above at 1140 and 1180, with support lower at 100 and 1080 before 1045. Continued Bounce in the Downtrend.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil just continued the path lower all week, ending with a new 6 year low. The daily chart shows the RSI very bearish running along at 30 while the MACD may be slowing its descent. No stopping in sight. On the weekly chart the Bollinger Bands are opening to the downside, to allow for more running lower. The RSI is oversold but a short look left shows it has been much more oversold. The MACD is just starting down. Bearish here too. There is support lower at 42 and 40 followed by 37.50. Resistance higher comes at 44.20 and 45 followed by 46.60. Continued Downtrend.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index continued the pullback from possible double top at 98.40, finding support in the SMA’s. Two small body candles to end the week may mean support again. The RSI on the daily chart shows a turn higher at the edge of the bullish zone, while the MACD continues lower. Mixed on this timeframe. On the weekly chart the consolidation of the large move higher continues. This week it touched the 20 week SMA again and held. The RSI on this timeframe is holding over the mid line but pointing lower as the MACD is avoiding a cross up and continuing lower. these support more downside. There is resistance at 97 and 98.40 followed by 99 and 100. Support lower comes at 95.25 and 94 followed by 92. Consolidation with a Short Term Downward Bias.

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

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

US Treasuries started the week pulling back from a break out only to reverse back higher. The uptrend remains in tact. The RSI is holding over the mid line near 60 and the MACD is approaching the signal line as it slows its ascent. Notice also that the trend higher is in a widening path. Some signs of topping. On the weekly chart the 50 week SMA and 38.2% retracement of the last leg higher continue to stall things. The RSI on the weekly timeframe is rising through the mid line while the MACD is crossed up. Looks like more upside on this timeframe. There is resistance higher at 124.40 and 126 followed by 127.20. Support lower comes at 123.50 and 122.50 before 120.25. Continued Uptrend.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite started the week with a small move higher, but it was very significant. It jumped over the 20 day SMA, a mark that has defined the trend as higher over the last year. The rest of the week it stayed there consolidating under 4000. The daily chart shows the RSI climbing back higher. The MACD is also rising. On the weekly chart you see consolidation. The RSI holding near the mid line and the MACD falling paints a mixed picture. I know you are now thinking the Government devalued their currency, this changes everything. It does not. Follow price. There is resistance higher at 4000 and 4220 followed by 4420. Support lower comes at 3875 and 3750 followed by 3600. Upward Bias in the Consolidation.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets did something they had not done in 6 years when they closed below the long channel this week. The daily chart shows the continuation lower of the downtrend with the RSI hugging the 30 level and the MACD bumping along lower. On the weekly chart the channel is more pronounced as is the break. Also notice that as it breaks down the Bollinger Bands are opening. The RSI is falling and just touching oversold territory with the MACD drifting lower. This is ugly. There is support lower at 34.40 and 31.80 followed by 30. Resistance above comes at 36 and 37 followed by 38 and 39. Continued Downtrend and Potential Shift to Long Term Downtrend.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index started out holding just over 12 where it ended last week, but spiked mid week. That lasted 1 day and only got to 16 before pulling back. and ending the week to the downside. The daily chart shows it running lower Friday and closing at the lows with the RSI turning down and the MACD drifting up. On the weekly chart the lower range continues without much guidance from the RSI or MACD. There is resistance at 15.67 and 18 followed by 22. Support lower comes at 12.40 and 11.80 before 10. Continued Low Volatility.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY started the week gapping higher, confirming the Hammer candle that ended the prior week. Monday was as far as it got though as Tuesday saw a move lower to the 150 day SMA and then a spike lower Wednesday before closing slightly higher. Thursday saw a Spinning top doji, reiterating the indecision. But then the week ended with a move higher Friday, confirming the Spinning Top higher. All that left the SPY up 68bp on the week and stick right in the middle of the 6 month range. The daily chart shows the RSI holding at the mid line with the MACD in a slight decline. The whole daily picture says more sideways in a range. The weekly chart shows the long consolidation with the tightening range. The RSI on this timeframe continues to hold over the mid line, in the bullish zone, with the MACD falling. The 50 week SMA and lower Bollinger Band seem to be acting as support. There is support lower at 208 and 206.40 followed by 204.40. Resistance higher comes at 210.25 and 211 followed by 212.50 and the prior highs. Continued Sideways Consolidation in the Long Term Uptrend.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM also started the week gapping higher, before pulling back Tuesday. But from there it settled the rest of the week moving sideways in the downtrending channel. The daily chart shows the RSI holding in the bearish zone with the MACD in a decline. The weekly chart shows a doji at the 50 week SMA and the top of the prior consolidation box. The RSI on this timeframe continues to hold in the bullish zone, but with the MACD falling. There is support lower at 120 and 119 followed by 118 and 117. Resistance higher comes at 122 and 123.50 followed by 125 and 126. Continued Pullback in the Long Term Uptrend.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ started the week gapping higher like the SPY, and then pulled back and consolidated at the bottom of a rising channel. The daily chart shows the RSI holding at the mid line with the MACD in a decline. Bearish short term. The weekly chart shows the price touching and holding at the rising trend support and 20 week SMA. The RSI on this timeframe continues to hold over the mid line, in the bullish zone, with the MACD falling but positive. There is support lower at 110 and 109 followed by 107.75 and 106. Resistance higher comes at 111 and 113 followed by 114 and 115. Continued Short Term Consolidation in the Long Term Uptrend.

Heading into August Options Expiration week the equity markets look to consolidating in the short term and better long term. Elsewhere look for Gold to continue the bounce in its downtrend while Crude Oil just continues lower. The US Dollar Index seems content to move sideways but with a short term downward bias while US Treasuries are biased higher. The Shanghai Composite looks to continue to consolidate in the longer uptrend while Emerging Markets look ugly with more downside to come. Volatility looks to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite their failure to move higher last week. Their charts show weakness continuing in the IWM and consolidation in the SPY in QQQ short term. All look better longer term with the QQQ strongest followed by IWM and then SPY. Use this information as you prepare for the coming week and trad’em well.

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