Macro Week in Review/Preview March 9, 2018

• Posted by Greg Harmon
• on March 9th, 2018

Last week’s review of the macro market indicators noted as the calendar turned to March equity markets again looked weak only to finish with a strong Friday, just like Friday February 9th. Elsewhere looked for Gold to continue to consolidate in a broad range while Crude Oil might pause in its short term downtrend. The US Dollar Index continued to consolidate sideways while US Treasuries were consolidating after their move lower.

The Shanghai Composite was biased to the downside short term and Emerging Markets looked to tighten their broad consolidation at the recent top. Volatility looked to remain elevated keeping the bias lower for the equity index ETF’s SPY, IWM and QQQ. Their charts showed big moves lower for the week and then strength on Friday suggesting a possible reversal. The weekly charts were not as optimistic with red candles at lower highs.

The week played out with Gold rising early in the week only to give it back later while Crude Oil went through its own roller coaster, rising then falling and end the week moving higher. The US Dollar gapped down and then closed the gap and held slightly lower while Treasuries moved in a very tight range at support all week. The Shanghai Composite moved higher out of consolidation and over the moving averages while Emerging Markets moved slightly higher.

Volatility continued to drift lower but holding over the long suppressed levels, relieving pressure on equities. The Equity Index ETF’s took advantage of this moving higher on the week. The SPY, IWM and QQQ all started higher Monday with the IWM continuing the rest of the week, but the SPY and QQQ pausing mid week before resuming the path higher. What does this mean for the coming week? Lets look at some charts.

Gold Daily, $GC_F

Gold Weekly, $GC_F

Gold started the week under the 50 day SMA after a great recovery from a 2 month low. It broke above the 50 day SMA Tuesday, but could not hold on, giving back the gains the rest of the week. The daily chart shows the lower high to go with the lower low. The RSI is flat under the mid line with the MACD flat just under zero, trendless.

The longer weekly chart shows the price holding over the 20 week SMA and prior resistance, now support. The RSI on this timeframe is pulling back to the mid line in the bullish zone with the MACD crossing down. There is support at 1315 and 1300 then 1278. Resistance above sits at 1345 and 1370 then 1400. Broad Consolidation.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil printed a Tweezers Bottom to end last week and confirmed it with a move higher Monday. Tuesday followed through but could not hold and it fell back further to a bottom Thursday. Friday saw a strong move to the upside to finish the week slightly higher. The daily chart shows the RSI meandering between 40 and 60, with the MACD floundering around zero.

The weekly frame shows a pullback to the former rising channel and 20 week SMA. It found support there and bounced. The RSI is pulling back though at the mid line with the MACD crossing down. There is support lower at 60 and 58 then 56 and 54. Resistance above sits at 62.50 and 65 then 66.50 and 69.50. Consolidation with a Downward Bias.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index was pulling back from a touch at prior resistance at the end of last week. It continued lower early in the week but found support quickly at a higher low and reversed. By Friday ti had closed the gap down and finished near unchanged on the week. The daily chart shows the RSI drifting between 40 and 60, trendless, with the MACD rising slowly but still negative.

On the weekly chart the bear flag rising off of the 61.8& retracement of the move higher from 2014 continues to build. The RSI is rising but still weak with the MACD about to cross up. There is resistance at 91.40 and 92 then 93 and 94. Support lower comes at 89.50 and 88.50 then 87.25 and 86.80. Broad Consolidation in Downtrend.

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

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

US Treasury Bonds were moving sideways at support when they entered the week. And that is how they exited the week as well. Some up and down activity in a tight range left them nearly unchanged. The daily chart shows the RSI holding at the lower end of the bullish zone with the MACD rising slowly.

The weekly picture shows the price holding at the third touch at support dating back to late 2016. The RSI on this timeframe is flat in the bearish zone with the MACD falling. There is support at 116.20 and 115.25 then 113.20. Resistance higher sits at 118.20 and 120.25 then 122 and 123.25. Consolidation in the Downtrend.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite was holding under the 200 day SMA as it came into the week. Monday saw a continuation sideways and then Tuesday it moved higher, but not by much. It held there until a move Friday took it over the 200 day SMA again and over the 20 day SMA for the first time since the beginning of February. The daily chart shows the RSI testing the mid line with the MACD crossing up, giving some positive prospects.

On the weekly chart the stall is happening just over the long term support/resistance zone. The RSI is testing the mid line here as well with the MACD flat. There is support at 3280 and 3160 then 3100 and 3000. Resistance comes above at 3360 and 3420 then 3540 and 3660. Consolidation of the Bounce.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets ended the prior week with a bounce off of the 100 day SMA, making a higher low. It continued higher Monday and Tuesday and settled until a second push up Friday. It remains below the February high with the RSI rising to the bullish zone on the daily chart and the MACD crossing up.

On the weekly timeframe the move off of the 20 week SMA is now near the long term resistance breached in January. The RSI is holding in the bullish zone with the MACD flat but positive. There is resistance at 50 and 51.75 then 53.40. Support lower comes at 48 and 46 then 45 and 44. Consolidation at the Highs.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index had stalled in a shot term bounce to end the prior week under 20. Monday saw a move lower with follow through the rest of the week, ending with a lower low Friday. It remains over levels where it spent most of the last 2 years though and over the 200 day SMA. The daily chart shows the RSI falling back to long term support with the MACD falling and about to turn negative.

The longer weekly chart printed a wide body red candle as it pulled back. The RSI is falling but still elevated with the MACD turning towards a pullback. There is support at 12.40 and 11.50 then 10. Resistance above is now at 15.67 and 18 then 22 and 24. Continued Drift Lower.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY came into the week a bit muddled. It had just printed a 3 Black Crows, a bearish candlestick pattern, but then reversed it with a strong Friday. Monday showed follow through ending at the 50 day SMA. It held there through Thursday and then gapped higher and ran Friday. It ended the week having retraced that 3 Black Crows.

The daily chart shows that it is approaching the Bollinger Bands®. The RSI is rising but has yet to cross 60 into a firm bullish zone, and the MACD is rising and positive. Overall a positive chart at resistance. A little push Monday could send it on the path to new highs.

The weekly frame shows a bullish Marubozu candle, strength all week long and into the close. It was also a bullish engulfing candle, boding for more upside. The RSI on this timeframe is rising in the bullish zone with the MACD kinking towards a cross up, but positive. Much stronger on this timeframe but not out of the danger zone until a new all-time high is made. There is resistance at 279 and 280 then 283.30 and 286.60. Support lower comes at 275 and 272.50 followed by 268 and 267. Continued Uptrend.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM came into the week having confirmed a reversal to the upside. And the daily chart shows that it just moved higher all week. It ended the week closing the gap from January 30th. The RSI is rising in the bullish zone, and the MACD is rising and positive. Overall a positive chart looking at new highs.

The weekly chart printed a bullish Marubozu candle as well. The RSI on this timeframe is rising in the bullish zone with the MACD turning towards a cross up. There is resistance at 160.25 and then new all-time highs above. Support lower comes at 158.25 and 156 then 154 and 153. Continued Uptrend.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ printed a bullish Piercing Line to end last week, rising off of the 20 and 50 day SMA’s. It continued higher all week long ending at a new all-time high. The daily chart shows the RSI is rising in the bullish zone, and the MACD is rising and positive. Overall very positive with a target on a Measured Move to 180.

The weekly picture shows Marubozu candle to the new high. The RSI on this timeframe is rising in the bullish zone with the MACD crossed up and rising. There is no resistance above. Support lower comes at 17095 and 169.25 followed by 167.50 and 166.50. Continued Uptrend.

Heading into March options expiration week the equity markets are looking strong, with the QQQ at all-time highs and the IWM and SPY near their highs and almost out of danger. Elsewhere look for Gold to consolidate in a broad range while Crude Oil consolidates with a longer term bias lower. The US Dollar Index is treading water in a downtrend while US Treasuries consolidate in their downtrend. The Shanghai Composite and Emerging Markets are both consolidating, the former from a bounce and the latter at the highs.

Volatility continues to drift lower easing the path for equities. The equity index ETF’s SPY, IWM and QQQ all posted stellar performance for the week, printing bullish Marubozu candles, with the QQQ ending at all-time highs. The SPY and IWM are close to new highs and should they print them the all clear signal will sound for equities. Use this information as you prepare for the coming week and trad’em well.

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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