From the Charts: Macro Week in Review/Preview October 29, 2010

Last week’s review of the macro market indicators for the week looked to bring weaker prices for Gold and a continued rise off of a bottoming process in the US Dollar Index. US Treasury Bonds looked to move lower as Oil consolidated in a range waiting for a catalyst. Emerging markets looked poised to move higher but may have some short term resistance. A steady and relatively low volatility index would just be a innocent bystander. The equity markets looked like they may pause or retreat slightly in the short term but are poised to move higher long term. Monday came and transformed into Tuesday, Wednesday and Thursday pretty uneventfully. The two items of note were a slightly rising Nasdaq and a slightly falling US Treasury bond fund. Although there were some intraday moves for the most part the charts of the macro factors marked time. With the yawning over for the week how does it look now and what can we expect next week? Let’s look at the charts.

(As always you can see these individual charts and more on my twitter feed and on chartly.)

Gold Daily

Gold Weekly

After falling below the 20 day Simple Moving Average (SMA) last Thursday it has acted as strong resistance for all of this week until Friday when it opened near it tested lower and then vaulted higher.  This action pulled Gold out of a Bear flag and has it going towards resistance at 1370, the mid point of the channel on the weekly chart and previous resistance on the daily.  If it can get back through that then the previous high of 1387 becomes the next resistance with 1400 above that on the daily chart.  The weekly chart shows further resistance at the top of the rising channel at 1454. Support comes at  1352 followed by  the 20 day SMA at 1345.93 and then 1320 from the daily chart.  The recent action has worked off the overbought condition on the Relative Strength Index (RSI) so there is lots of room higher.  The Moving Average Convergence Divergence (MACD) indicator turning up on the daily chart and and positive on the weekly chart add support to the case for more upside.

West Texas Intermediate Crude Daily

West Texas Intermediate Crude Weekly

Crude oil broke above the 81 trend line on the weekly chart four weeks ago and has been consolidating since.  The daily chart shows support of a falling trendline from the symmetrical triangle break out at 79.75 and at 81 above that.  Resistance appears at the 83-84 area.  The RSI is looking to test 50 and the MACD is negative.  Note also that the Bollinger bands are getting tight, foreshadowing a big move soon.  The weekly chart shows the prominent Bull flag right at 81 with resistance at 84 and then 87.

US Dollar Index Daily

US Dollar Index Weekly

The US Dollar Index spent the week between 77 and 78 for the most part but exhibited interesting characteristics each day with a bullish hammer confirmed by two strong candles, then a reversal and ended the week with an inverted hammer.  This bottoming process is holding support at 77 with 76.75 and 76 support points lower.  Above teh resistance this week at 78 the next resistance point is at 79.  The Bollinger bands on the daily chart are squeezing so expect the bottoming to reverse higher or drop soon.
if it breaks lower then there is support at 76 and then 74.80 from the weekly chart.  If the break is higher then resistance above 79 comes at 79.50 and then 80.  The RSI on the weekly chart is skidding along the 30 line and the MACD is waning, hinting that the Index may be ready to rise.  These indicators are already giving positive support on the daily chart.
iShares Barclays 20+ Yr Treasury Bond Fund Daily

iShares Barclays 20+ Yr Treasury Bond Fund Weekly

The US Treasury Bond ETF is slowly trending lower with support at 99 then 98 and 97 on the daily chart.  It is now below the 20, 50, and 100 day SMA’s and they are also starting to roll lower.  The RSI on the daily chart has stayed below the 50 level since the start of the drop but the MACD is vacillating although negative.  Resistance comes at 100.60 and then 101.22.  Flipping to the weekly chart the picture is much more bearish, starting with today’s bearish engulfing candle, which closed below the 20 week SMA.   The volume trend shows a slight trend lower and the RSI and MACD are both supporting a move lower.  The weekly chart shows support at 100 followed by 98 and then  96.
iShares MSCI Emerging Markets Index Daily

iShares MSCI Emerging Markets Index Weekly

The Emerging market indicator, EEM, started the week with a shooting star but has since consolidated at the 20 day SMA.  The squeezing Bollinger bands on the daily chart bode for a big move soon, and shifting to the weekly chart it seems likely to be to the upside. Resistance comes at 46.30 and then the recent high of  47.03 on the daily chart.  The weekly charts shows that on a measured move the target upside is 55 out of the channel break.  Support can be found at 45.50 and 45 from the daily chart and at 43.40 below that from the weekly chart.
VIX Daily

VIX Weekly

The Volatility Index has been trying to get back into its channel above 21.25 and tested that Friday, closing just below.  If it does get through that resistance then the next level to challenge would be 22.22 and then 23.32-23.53.  If it rejects and bounds lower then the support at 20 or 18.80  may stop it before further downside support at 18.  Rising RSI on both charts and rising MACD on the daily chart support an increase in volatility to come.

SPY 60 minute

SPY Daily

SPY Weekly

The hourly chart of the SPY shows more basing in the uptrend again this week.  This is also seen on the daily chart where it has played between 117 and 118.75 for a couple of weeks. Above that range there is resistance at 119.69 from the daily chart, 120.89 from both charts and then 124.12 from the weekly chart. The rising 20 day SMA at 117.35 looks to be giving it some lift and may help it break the range.  The weekly chart shows a continued uptrend supported by a rising RSI and MACD.

IWM Daily

IWM Weekly

IWM has also been consolidating on the daily chart for a few weeks.  It is currently getting support from the rising 20 day SMA, at 69.77 and has further support lower at 69 on the daily chart and 67.50 on the weekly chart.   The RSI and MACD look a bit weak on the daily chart suggesting that the rising trend on the weekly chart may be due for a pause or pullback.  Resistance to the upside comes at 71.25 followed by 72 with the weekly chart adding  74 and then 75.90.  The trend remains higher for now.

QQQQ Daily

QQQQ Weekly

This is the most bullish of the equity index ETF’s on both the daily and weekly charts.  the uptrend shows  resistance at 54 the highs from October 2008.  Support comes at 52.11 followed by 51.72 and then 51 on the daily chart.  The weekly chart adds support lower at 50.44 and then 50.  The SMA’s are rising, the RSI’s are high but not too extended, the MACD are supportive of a further run and in both charts the price is clinging to the top edge of the Bollinger band, like it should in a strong rally.

So next week looks to bring a continued rise in the price for Gold.  Crude Oil and the US Dollar Index will be looking for a catalyst to move out of their recent ranges. US Treasury Bonds look to continue lower as emerging market move higher. Volatility may be making a comeback which could stall the equity markets which look good and still in their uptrends with the QQQQ a strong leader.  Good luck next week!

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

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.

blog comments powered by Disqus
Dragonfly Caps Blog