Macro Week in Review/Preview for April 2, 2011

Last week’s review of the macro market indicators looked to bring better prices for both Gold and Crude Oil, and continuing devaluation of the US Dollar Index but with the potential for it to start the week higher. US Treasuries appeared to be consolidating with a bias lower. The Shanghai Composite and Emerging Markets were both biased higher, but with the expectation of a continued consolidation on the Emerging Markets side. The Volatility Index looked biased lower, with tight upside risk, allowing for the SPY, IWM and QQQ to continue higher, with all three mindful of a lower close Monday reversing this bias.

The week began with Gold and Crude Oil moving lower then reversing, but the Dollar Index just moving lower. Treasuries bounced lower then recovered. The Shanghai Composite started higher then fell back but the Emerging Markets just took off higher. The Volatility Index popped early but pooped out. Equity Indexes diverged with SPY and QQQ moving sideways then rising and while IWM just moved higher. What does this mean for the coming week? let’s look at some charts.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

Gold Daily,$GC_F

Gold Weekly,$GC_F

Gold started the week lower but recovered after spending a couple days below the 20 day Simple Moving Average (SMA). The daily chart shows that is needs to get back over 1445 to continue the bullish short term trend. The Relative Strength index (RSI)is bouncing along but still in bullish territory and the Moving Average Convergence Divergence (MACD) indicator is flat to slightly improving. The weekly chart shows the long uptrend channel but with a series of doji candles the last few weeks. The RSI on the weekly chart is sloping and moving higher supporting some upside, while the MACD is flat. With the trend to the upside there is resistance from the weekly chart at 1500, and support for a pullback at 1422 followed by 1411 and 1400 on the daily chart. Expect the same volatility but a trend to the upside to continue.

West Texas Intermediate Crude Daily,$CL_F

West Texas Intermediate Crude Weekly,$CL_F

Crude Oil started lower but rallied hard off of support at the 20 day SMA. Two bullish candles ending at new highs begs at least a third to complete the Three Advancing White Soldiers pattern. There is resistance at 110 higher on the daily chart that may slow it down. But the RSI is sloping higher and the MACD has just crossed bullishly. The weekly chart is also very bullish. The MACD and RSI are rising and the Bollinger bands are expanding to facilitate more upside. There is resistance to the upside at 110 from the daily char and then 116 ans 123 from the weekly chart. Expect it to continue higher next week with support at the 104.82.

US Dollar Index Daily,$DX_F

US Dollar Index Weekly,$DX_F

The US Dollar Index hit the 20 day SMA and lost all its energy moving lower the full week. The daily RSI and MACD support this move lower with a negative slope and declining value. The weekly chart is showing a bear flag developing over the last three weeks. But the Bollinger bands are expanding to allow a move lower. The weekly RSI and MACD support more downside as well. Support comes at the 75.60 Fibonacci level and then 75.25 on the daily chart and then 74.80 and 74.30 from the weekly chart. A surprise move higher would find resistance at77.30 but do not count on it.

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

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

US Treasuries moved lower all week until rebounding off of the base of the bearish expanding wedge. The RSI and MACD offer little clue to the future as they are fairly flat. The weekly chart shows a bounce off of the 50 week SMA printing a doji just over the 20 week SMA. The weekly RSI has been unable to break through the mid line, but the MACD is improving. If support fails then the 8 year rising uptrend is in the picture for another test at 89.20. Resistance comes first at 93.11 and then 94.50. Look for a continuation of the recent down move next week unless the 93.48 high close for last week is broken.

Shanghai Stock Exchange Composite Daily,$SSEC

Shanghai Stock Exchange Composite Weekly,$SSEC

The Shanghai Composite rejected off of the 3012 area but has been holding the 20 day SMA and 2950 – 2965 area as support. The RSI is now testing the mid line and the MACD is flat lined. On the weekly chart it is moving higher towards the 3050 Fibonacci level after moving above the downtrend line. The RSI is bullish but with little slope and the MACD is flat to slightly up. The bias is to the upside for the coming week but only barely, until it can clear 3050. Support on a move down below 2950 comes at 2873 – 2890.

iShares MSCI Emerging Markets Index Daily,$EEM

iShares MSCI Emerging Markets Index Weekly,$EEM

Emerging Markets, as measured by the EEM, finally made the move higher. We have been waiting on this for what seems like months, wait it has been months. Everything looks positive on the daily chart. The RSI is sloping steeply higher, the MACD is increasing, volume has picked up on this move and the Bollinger bands are expanding. The weekly chart is just as positive, but closed outside of the Bollinger bands. The RSI is even steeper on the weekly and the MACD is just now crossing higher. Look for this to test the 50 level from 2008 and then the 52 level from 2007 in the near future.

VIX Daily,$VIX

VIX Weekly,$VIX

The Volatility Index seems to have shaken off the spike from mid March and settled lower. The SMA’s on the daily chart are flat lined creating resistance levels near 18 then 20 and 21.25. The RSI and MACD on the daily chart point lower and there is support at 15.50. The weekly chart also suggests a continued downward move. The weekly RSI is moving lower and the MACD is crossing down. Support comes at 15.67. Look for a continued drift next week with a base a 15.50 – 15.67 and a top at the 21.25 area.

SPY Daily,$SPY

SPY Weekly,$SPY

The SPY had a great week following on from the move off of the bottom 2 weeks ago. It is now approaching the top of the Bollinger bands with the RSI rising and the MACD improving. Volume has been increasing the past week to add weight to the move but Friday’s solid black candle after a doji and evening star highlight the bearish potential. It needs to get over the 134.12 level to give more comfort to the bulls. The weekly chart is also bullish with the RSI rising and MACD improving. The next resistance higher is at 134.12 and then 135.14 and 138.50. Should the bearish aspects confirm then support comes at 131.46. Expect the uptrend to continue next week.

IWM Daily,$IWM

IWM Weekly,$IWM

The IWM also had a great week following on from the the bottom. Also approaching the top of the Bollinger bands, with the RSI rising and the MACD improving it looks higher still. Friday’s solid black near doji candle after an evening star highlight the bearish potential. But the expanding Bollinger bands give more comfort to the bulls. The weekly chart is also bullish with the RSI rising and MACD improving and about to cross. The next resistance higher is at 85 and then 86 and 90. Should the bearish aspects confirm then support comes at 82.50 – 83 and then 81.57. Expect the uptrend to continue next week.

QQQQ Daily,$QQQQ

QQQQ Weekly,$QQQQ

The QQQ also had a great week following the move off of the bottom. It is now approaching the top of the Bollinger bands but with the RSI rolling and the MACD leveling. Volume has been increasing the past week to add weight to the move up but Friday’s solid black candle after an evening star and then a doji highlight the bearish potential. It needs to get over the 58.20 level to give more comfort to the bulls. The weekly chart is also bullish with the RSI rising and MACD improving. The next resistance higher is at 58.20 to 58.87 and then 60 and 61.08. Should the bearish aspects confirm then support comes at 56.50 and then 54.26. Expect the uptrend to continue next week.

So next week looks to bring higher prices for Gold and Crude Oil. The US Dollar index looks to continue lower as US Treasuries join that move. The Shanghai Composite looks to continue to consolidate but with an upward bias, while the Emerging Market ETF continues the move higher. The Volatility Index should continue in a tame and relatively low range allowing the SPY, IWM and QQQ to continue higher. Of the three the IWM looks the strongest followed by the SPY and then the QQQ. Use this information to understand the trend and how it may be effected as you prepare for the coming week and trade’m well.

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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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