Macro Week in Review/Preview June 29, 2018

• Posted by Greg Harmon
• on June 29th, 2018

Last week’s review of the macro market indicators noted Summer had officially begun with the Solstice and left only one week in the second quarter. Stocks looked to enter the last week with a bit of weakness in the short term but remain strong in longer timeframes. Elsewhere looked for Gold to continue lower while Crude Oil reversed and resumes the uptrend.

The US Dollar Index was pausing in its uptrend while US Treasuries continued to mark time moving sideways. The Shanghai Composite and Emerging Markets both continued to look weak and ready for more downside. Volatility looked to remain subdued keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts showed consolidation or minor pullbacks in the short term with the IWM and QQQ near all-time highs but the SPY continuing to lag.

The week played out with Gold continuing to move lower, finding support Friday and ending with a small bounce while Crude Oil moved higher all week. The US Dollar bounced around a little but basically was unchanged on the week while Treasuries moved higher after a gap up Wednesday. The Shanghai Composite continued down to the 2016 lows and found support while Emerging Markets also found support mid week and bounced.

Volatility popped Monday but had fallen back near unchanged by the end of the week, keeping the bias higher for equities. The Equity Index ETF’s started the week heading lower, but all found their footing Thursday and moved back higher Friday. All 3 finished down for the week, instilling some caution, and the IWM and QQQ printing potential topping candles for the month. What does this mean for the coming week? Lets look at some charts.

Gold Daily, $GC_F

Gold Weekly, $GC_F

Gold came into the week in a downtrend and continued lower Monday. It finally found support as Friday began and bounced slightly to end the week. The daily chart shows the RSI is now in oversold territory and the MACD reaching extreme low levels as the price approaches the December 2017 lows. Perhaps a pause is in order in the short term.

The weekly chart continues to show weakness though with the price approaching the 200 week SMA from above. The RSI on this timeframe is now in the bearish zone and falling with the MACD negative and falling. This bodes for more downside. There is support at 1245 and 1215 then 1200. Resistance higher is at 1265 and 1278 then 1300. Possible Pause in Downtrend.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil started the week after a Friday break of resistance to the upside on a strong candle. It paused Monday to catch its breathe and then moved higher all week, ending at a more than 3½ year high. The daily chart shows the price outside of the Bollinger Bands® for 4 consecutive days, suggesting a pause is in order. The RSI is rising and bullish though and the MACD moving up. Neither are extreme.

The longer timeframe shows Crude closing in on some minor resistance from late 2014. The Bollinger Bands® are opening to the upside on this timeframe with the MACD about to cross up and the RSI rising and bullish. No need to reset on this timeframe. There is resistance at 75 and then 83 to the upside. Support lower comes at 72.80 and 71 then 69.50 and 66.50 before 65 and 62.50. Uptrend Continues.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index was pulling back in its latest move higher when the week started. It continued Monday but found support and rallied to retest resistance by Thursday. But it could not break through and pulled back Friday. The daily chart shows the failed attempt to break out over the November high with the RSI bullish and rising and the MACD about to cross up.

The weekly chart shows the cross of the 100 and 200 week SMA’s as providing some difficulty to move higher. The RSI is strong and rising though with the MACD rising and positive. There is resistance at 95 and 96.50 then 97.40 and 98.30 before 99. Support lower comes at 94 and 93 then 92 and 91.40. Pause in Uptrend.

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

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

US Treasuries came into the week holding over their 20 day SMA and stuck in a broad consolidation. Monday and Tuesday did nothing to change that view and then they gapped higher Wednesday. Small gains the rest of the week saw them end at the 200 day SMA and resistance at what was prior support. Then it pulled back late Friday. The daily chart shows the RSI bullish and rising with the MACD positive and moving up.

On the longer timeframe the RSI is trying to move over the mid line and up into the bullish zone. The Bollinger Bands® had squeezed and are now opening giving some promise to a continuation higher. The MACD is rising towards being positive. There is resistance higher at 122 then 123.25 and 124.25 then 125.25 and 127. Support lower comes at 120.25 then 118.20 and 116.20. Possible Break of Resistance in Uptrend.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite was in a free fall as the week began. That continued with it dropping through Thursday’s close before getting a bounce Friday. Along the way it retested the 2 year lows. The daily chart shows it oversold with the RSI near 20 and the MACD at an extreme low. Perhaps time for a pause in the downtrend.

The weekly chart is also now in oversold territory with the RSI falling below 30 and the MACD falling and negative. The MACD is not extreme on this timeframe though. The 2016 low is now not far away. There is support at 2800 and 2650 then 2450. Resistance comes above at 2900 and 2940 then 3000 and 3040 before 3100. Possible Pause in the Downtrend.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets had bounced to end the prior week giving hope for a reversal. But Monday brought a gap down and continuation with the bottom settling in near the open Thursday. They rose Thursday and continued higher Friday, but still ended the week lower. The daily chart shows the possible reversal off of a nearly 1 yr low with the RSI turning back up and the MACD also turning higher. Both remain in the bearish zone though.

On the longer timeframe the drop found support at the 100 week SMA. This was just beyond a 38.2% retracement of the move higher off of the January 2016 low to the January 2018 top. The RSI remains headed lower in the bearish zone with the MACD just crossing below zero. There is support lower at 42.25 and 41 then 40 and 38.90 before 38. Possible Reversal in the Downtrend.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index started the week with a push to the upside and a run nearly to 20. It fell back intraday under the 200 day SMA and then settled there Tuesday. Wednesday saw another probe higher, with this one closing over the 200 day SMA for the first time in 2 months. It pulled back slightly Wednesday and then dropped back Friday to finish the week slightly higher. The daily chart has the RSI pulling back and the MACD leveling, both in bullish territory.

The weekly frame shows a move slightly higher after a probe to the upside failed leaving a long upper shadow. The RSI is rising up off of the mid line with the MACD turning to cross up. There is resistance at 18 and 22 then 26 and 30. Support lower comes at 12.40 and 11.50 then 10. Low Volatility with a Risk of Movement Higher.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY came into the week after an inside day and with price holding at the 20 day SMA. It gapped down Monday and continued lower to the 50 day SMA. It held there Tuesday, but then pushed lower again Wednesday, settling under the 100 day SMA and at the low of the day. Thursday saw a reversal with a Piercing Line and it confirmed with a higher close Friday. That Friday candle left a lot of questions though.

A long upper shadow and a close at the low of the day hardly seems like bullish confirmation. Neither does the fact that it did not close the gap down. The daily chart does show the RSI bounce off of the lower edge of the bullish zone and it has a MACD starting to level after turning negative. The Bollinger Bands® are mainly running sideways with some room below but much more above.

The weekly chart shows a 3 candle pullback from resistance finding support over that of 5 weeks ago. The RSI on this timeframe is falling but remains in the bullish zone and over the mid line with the MACD crossing down but positive. There is support lower at 269 and 267.50 then 265 and 262.50 followed by 260 and 258. Resistance above sits at 272.50 and 274.50 then 277.50 and 279 before 280. Continued Consolidation.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM came into the week pulling back from an all-time high. It dropped Monday and continued lower until it hit the 50 day SMA Thursday and bounced. But Friday failed to confirm a reversal, closing down 11 cents. It also had an upper shadow and a close near the low of the day. The daily chart does show the RSI moving sideways near the lower edge of the bullish zone and it has a MACD moving lower but positive. The Bollinger Bands® are mainly running sideways with price near the lower edge.

The weekly chart confirmed a Shooting Star reversal with a long red candle. Perhaps a retest of the break out is coming.
The RSI on this timeframe is pulling back from a touch at overbought in the bullish zone with the MACD kinking down. There is support lower at 162 and 160 then 158 and 156. Resistance above sits at 164.25 and 166.25 then 167.80 and 170. Pullback in Uptrend.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ came into the week in consolidation and just off the all-time high. It gapped down Monday and continued lower to the 50 day SMA Thursday where it bounced. It confirmed a Piercing Line reversal with a higher close Friday but the same questionable candle as the SPY. The daily chart does show the RSI bounce off of the lower edge of the bullish zone and it has a MACD starting to level after turning negative. The Bollinger Bands® are mainly running sideways with price near the bottom.

The weekly chart shows a break down back below the prior high from March. The RSI on this timeframe is falling but remains in the bullish zone and over the mid line with the MACD about to cross down but positive. There is support lower at 170.95 and 169.75 then 167.50 and 166.50 before 164.50 and 162. Resistance above sits at 173 and 174 then 176 and 177.89. Pullback in Uptrend.

As we close the books on the 2nd Quarter and prepare for a holiday shortened 4th of July week, equity markets look to have run out of gas. Maybe the short week will re-energize them. All there indexes had a positive quarter with the IWM just out pacing the QQQ, 7.9% to 6.5% and the SPY gaining 3.1%. The QQQ won the month up 0.9% to the 0.6% for the IWM and the SPY eked out a 0.1% gain. The monthly candles all look toppy with long upper shadows, while the quarterly candles are all looking strong.

Elsewhere Gold looks as it may pause in its downtrend while Crude Oil continues to race higher. The US Dollar Index is pausing in its uptrend while US Treasuries are on the edge of a break out to the upside. The Shanghai Composite may be ready to pause in its downtrend while Emerging Markets are setting up for a possible reversal higher. Volatility looks to remain low but above recent levels keeping the wind at the backs of the equity markets but the breeze blowing softer.

The equity index ETF’s SPY, IWM and QQQ, all had a mixed week with early signs of strength Friday fading into the close, leaving questions about the short term. The longer weekly timeframe was much less troublesome showing consolidation for the SPY continuing and the IWM and QQQ digesting recent moves higher. 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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