Macro Week in Review/Preview November 30, 2018

• Posted by Greg Harmon
• on November 30th, 2018

Last week’s review of the macro market indicators noted with Thanksgiving behind, the holiday shopping season is in full swing but the price action in the equity markets was casting a dark shadow over the festivities. Elsewhere looked for Gold to continue in its uptrend while Crude Oil continued to move lower. The US Dollar Index was resuming its move higher while US Treasuries were reversing to the upside. The Shanghai Composite might also be reversing higher while Emerging Markets continued to pause in their downtrend.

Volatility remained elevated and had an upward bias which was keeping the bias lower for the equity index ETF’s SPY, IWM and QQQ. Their charts all looked weak on the shorter timeframe, with the QQQ the worst under the October lows and nearing the February lows. The IWM was nearing 12 month support while the SPY sat at the October low.

The week played out with Gold dipping mid week and recovering, but then drifting lower while Crude Oil is making a base after its long drop. The US Dollar held in a tight range while Treasuries gave up some ground Monday but then held the rest of the week. The Shanghai Composite built an expanding base, for a possible reversal while Emerging Markets held in the top of the consolidation range.

Volatility pulled back slightly but remained in the high teens, keeping light pressure on equities. The Equity Index ETF’s saw measured improvement on the week but remain below important levels. All are below their 200 day SMA’s and short of making higher highs. The SPY is in the best shape, kissing the 200 day SMA in sideways consolidation while the IWM is well below but also in a range. The QQQ is still running in a downtrend. What does this mean for the coming week? Lets look at some charts.

Gold Daily, $GC_F

Gold Weekly, $GC_F

Gold was consolidating at its 20 day SMA when the week began, after a move higher. It held there Monday but dropped sharply Tuesday. Wednesday saw it recover the full drop and move back higher Thursday. Then it gave some back Friday to end the week slightly lower. The daily chart has a RSI holding at the mid line with the MACD level near zero.

The weekly chart shows the Bollinger Bands® squeezing as the price remains capped by the 200 week SMA. The RSI is also stuck at the mid line with the MACD rising toward zero. There is resistance at 1245 and 1265 then 1278 and 1300. Support lower comes at 1215 and 1200 then 1185. Short Term Consolidation.

West Texas Intermediate Crude Daily, $CL_F

West Texas Intermediate Crude Weekly, $CL_F

Crude Oil had fallen out of a small consolidation and ended the prior week with a strong move lower. The weekend calmed it though and it held there Monday and throughout the week. The stability was not enough to work off oversold signals in the RSI and MACD though on the daily chart. I am watching the confluence of SMA’s (50, 100 and 200 day) as when they all cross there are sometimes fireworks.

The weekly picture shows the price moving through the 200 week SMA with the Bollinger Bands® getting very wide. The RSI on this timeframe is now also oversold with the MACD negative and falling. There is support under 50.40 at 49 and 47 then 45. Resistance above is at 51.50 and 52.50 then 55.50 and 56 before 58. Pause in Downtrend.

US Dollar Index Daily, $DX_F

US Dollar Index Weekly, $DX_F

The US Dollar Index came into the week rising from a higher low. It continued early in the week but stalled out and pulled back slightly Wednesday. Friday saw another push to the upside and it ended the week higher, but short of the early November high. The RSI on the daily hart is moving back higher in the bullish zone with the MACD trying to cross up and positive.

On the longer timeframe the it had its highest close since June 2017. The RSI is bullish and rising with the MACD starting to lift off of the signal line and positive. There is resistance at 97.40 and 98.30 then 99 and 100. Support lower comes at 96.50 and 95 then 94 and 93. Uptrend.

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

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

US Treasuries had just made a higher high as the week started. They pulled back Monday to the 50 day SMA and then held there the rest of the week with a slight upward drift. The daily chart shows the RSI retest the mid line and then start higher with the MACD rising and positive.

The weekly chart shows the bounce toward a retest of the breakdown area from early October. The RSI is rising but short of the mid line with the MACD about to cross up. There is resistance at 116.20 and 118.20 then 120.25. Support below 115.25 comes at 113.20 and 111 then 108.50. Bounce in Downtrend.

Shanghai Stock Exchange Composite Daily, $SSEC

Shanghai Stock Exchange Composite Weekly, $SSEC

The Shanghai Composite had dropped below its critical 20 day SMA as the week started. It held there Monday and then made marginally wider candles all week, a possible reversal sign. The RSI on the daily chart is moving lower in bearish territory with the MACD falling and negative.

The weekly chart shows a drift lower with the RSI holding in the bearish zone and the MACD flat and negative. There is resistance higher at 2650 then 2700 followed by 2800 and 2900. Support lower comes at 2450 and 2320 then 2250. Downtrend.

iShares MSCI Emerging Markets Index Daily, $EEM

iShares MSCI Emerging Markets Index Weekly, $EEM

Emerging Markets entered the week fading from a bounce attempt. But they saw some strength and moved back to the November high by mid week. This took them back over the 50 day SMA and then held there with very tight candles the rest of the week. The daily chart shows a building attempt to reverse with the RSI knocking on the edge of the bullish zone and the MACD rising and now positive.

The view on the weekly chart is much less promising as it sits under the 20 week SMA. The RSI is trying to move higher but remains under the mid line with the MACD trying to cross up. There is resistance at 42.25 and 44 then 46 and 48. Support under 41 comes at 40 and 38.80 then 38 and 37.50. Pause in Downtrend.

VIX Daily, $VIX

VIX Weekly, $VIX

The Volatility Index was sitting over its 20 day SMA and in the low 20’s as the week started. It dropped below both on Monday and then held there at its 50 day SMA the rest of the week, in the high teens. The daily chart shows the RSI level just under the mid line with the MACD about to turn negative.

The weekly timeframe shows a possible Handle building after a Cup. The RSI is falling to the mid line with the MACD stalling and positive. There is resistance at 22 and 28 then 31 and 45. Support below 18 comes at 15.67 and 12.40 then 11.50. Elevated but Stable Volatility.

SPY Daily, $SPY

SPY Weekly, $SPY

The SPY was retesting the October lows and looking weak as the week began. Monday saw the Inverted Hammer from Friday confirmed as a reversal though as it gapped higher. It followed through Tuesday and closed the last gap down. Then rocketed higher Wednesday following the Powell speech. Thursday it took a breather and started to look like the prior November high when it printed a doji. But Friday continued higher.

It closed the week with a touch at the 200 day SMA but just under it. The daily chart shows the RSI peeking over the mid line with the MACD moving higher toward positive. Both support more upside but neither is in the bull range yet. A very productive week on this scale, but it needs to move over the 100 day SMA and October and November bounce highs to sound the all clear signal.

The weekly chart looks a lot more like a consolidation range after the pullback. Volume tailing off is a good sign of potential exhaustion of the down move. The RSI is pushing at the mid line with the MACD starting to level. There is resistance at 277.50 and 279 then 280 and 281 before 284 and 286. Support lower comes at 274.50 and 272.50 then 271.40 and 269 before 265. Broad Consolidation after Downtrend.

IWM Daily, $IWM

IWM Weekly, $IWM

The IWM was consolidating at the October lows and looking weak as the week began. Monday saw it gap higher and Wednesday it followed through continuing Friday to end the week over the 20 day SMA. The daily chart shows the RSI peeking over the mid line with the MACD moving higher toward positive.

The weekly chart shows consolidation range over 12 month support. The RSI is pushing higher with the MACD starting to level. There is resistance at 154 and 155 then 1156 and 158.60. Support lower comes at 152.50 and 150.50 then 148 and 145.70. Broad Consolidation after Downtrend.

QQQ Daily, $QQQ

QQQ Weekly, $QQQ

The QQQ looked the worst at the start of the week, sitting levels last seen in April. Monday saw it move higher and that continued all week with only a pause Thursday. It closed the week over the 20 day SMA. The daily chart shows the RSI moving over the mid line with the MACD moving higher.

The weekly chart shows a strong move higher toward the 50 week SMA with a bullish Marubozu. The RSI is pushing up toward the mid line with the MACD still running lower. There is resistance at 169.75 and 170.95 then 173 and 174 before 177 and 178. Support lower comes at 167.50 and 165.50 then 162.80 and 160.50. Bounce in Downtrend.

With 1 month left in the year equities have given up most or all of their gains for the year, but are looking to start December moving higher. Perhaps a Santa Claus rally can repair some of the damage. Elsewhere look for Gold to consolidate in the short term while Crude Oil pauses in its downtrend. The US Dollar Index is resuming the path higher while US Treasuries bounce in their downtrend. The Shanghai Composite is resuming its path lower while Emerging Markets pause in their downtrend.

Volatility looks to remain elevated but stable, putting light pressure on equities. The equity index ETF’s SPY, IWM and QQQ, all showed great strength on the week and look to continue that into December. On the longer scale the QQQ has the most work to do to reverse the downtrend, while the IWM and SPY have stopped the bleeding for now. 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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