Macro Week in Review/Preview March 18, 2011

Last week’s review of the macro market indicators looked like further consolidation for Gold, Crude Oil and Treasuries, before they can all start to move higher. The US Dollar Index looked to continue lower. The Shanghai Composite and Emerging markets also look to consolidate further with a bias to the upside longer term. The Volatility Index is looking tired after testing higher and may push lower again, but not move much from where it is now. The equity ETF’s SPY, IWM and QQQQ all look set up to continue lower, despite finishing the week better on Friday.

The early part of the week was dominated by the news out of Japan sinking equities and whipsawing Gold and Crude Oil and propping up the US Dollar Index and US Treasuries. By the end of the week equities had regained some ground and Gold and Crude were higher. Treasuries had peaked and fell and the US Dollar Index had made lower lows. What does this mean for the coming week? Lets look at some charts.

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

Gold Daily

Gold Weekly

Gold tested support of the extension of the rising trendline from October twice this past week and held. It now has resistance higher at 1430 to deal with before a run at new highs over 1444. The Relative Strength Index (RSI) on the daily chart held a test of the mid line and is rising now in bullish territory. The daily Moving Average Convergence Divergence (MACD) indicator has leveled lower and is starting to improve. The weekly chart printed a doji that tested support of the 20 week Simple Moving Average (SMA) and held. The MACD on the weekly is about to cross and the RSI is flat but firmly in bullish territory. The RSI’s and MACD’s indicate a move higher and the expanding Bollinger bands on the weekly chart look ready to facilitate this. Look for Gold to move higher next week, with support at 1411 and 1400 in the interim.

West Texas Intermediate Crude Daily

West Texas Intermediate Crude Weekly

Crude Oil started the week lower only to catch a bid sand finish on an up note, after testing the long standing uptrending line that is now support. The long shadows on the Friday candle suggest some indecision. To go with that the RSI and MACD have gone flat on the daily charts. The rising 20 day SMA looks to break the ties and suggest a move higher. The weekly chart gives a clue as to why the indecision. After breaking above the Bollinger band last week it is now falling back in the bands. With the 100 area as support look for Crude Oil to make another move higher to test the 104.82 resistance are next week. If it gets through then 107, the high from two weeks ago is the next target.

US Dollar Index Daily

US Dollar Index Weekly

The US Dollar Index started the week holding support at the 76.24 level but lost it by Friday, testing support at the 75.60 Fibonacci level. On the daily chart the RSI, MACD and SMA’s all point lower. The only indicator that it may slow is that it finished outside of the Bollinger bands Friday. The weekly chart shows the continued downtrend off of the 81.40 area at the beginning of the year. The RSI, MACD and SMA’s on the weekly chart also all point to a move lower, but on this chart the Bollinger bands are expanding to facilitate the move. The next support levels lower are 74.80 and 74.30 before the 71.50 base from 2008. Look for it to test at least one of these levels.

iShares Barclays 20+ Yr Treasury Bond Fund Daily

iShares Barclays 20+ Yr Treasury Bond Fund Weekly

US Treasuries continued their move higher this week. Despite the shooting star Wednesday on the daily chart, the week finished back inside he Bollinger bands and over the 100 day SMA and two other key support levels. The RSI and MACD are creeping higher as well. The important thing on the daily chart to continue higher is now that it has printed a higher high it must also print a higher low. The rising 20 day SMA is looking to solidify that. The weekly chart shows the continued move higher off of the 8 year rising uptrend line. The RSI is now ready to pierce the mid line and the MACD is crossing positive as it moves to positive. Also notice the volume has increased as it has moved higher. Look for this to continue next week with resistance in the 95 area and then 95.79 – 96.00.

Shanghai Stock Exchange Composite Daily

Shanghai Stock Exchange Composite Weekly

The Shanghai Composite consolidated in a bear flag this week mainly between the 20 and 100 day SMA’s. The RSI is skipping along the mid line, and the MACD on the daily chart has gone slightly negative. This is also near the mid point of the Bollinger bands. There is a lot of pressure building here and notice that the flat SMA’s are starting to roll up. The weekly chart shows a retest of the downtrend line from the upside holding, just above the rising 20 and 100 week SMA.The MACD is flat and the RSI is above the mid line, but sloping down towards it. The Bollinger bands are getting tight on both charts. Look for a range next week until it can break through either 3050 on the upside or 2700 on the downside. A slight bias to the upside from the SMA’s.

iShares MSCI Emerging Markets Index Daily

iShares MSCI Emerging Markets Index Weekly

The Emerging Markets ETF continued its broad sideways consolidation this week. Something to start watching is that it took about five months for it to complete the move higher and it now nearing 5 months that it has been consolidating. The RSI and MACD on the daily chart do not offer any real tells for future moves. The weekly chart shows the consolidation in a tight channel between 44.30 and 48.40. Also notice that the Bollinger bands are getting very tight implying a move soon. The MACD on the weekly is negative and the RSI is drifting along the mid line but has been trending down. Look for more of the same next week with a slight bias to the downside. Under the weekly channel there is support at 43.10.

VIX Daily

VIX Weekly

The Volatility Index continued its trending higher this week, with a big spike mid week as well. The range now seems to have been broken and all the SMA’s are sloping higher on the daily chart expect the 200 day SMA. The RSI is approaching the mid line again and the MACD is leveling on the daily chart. The weekly chart suggests a move higher is coming very clearly. The RSI is steeply sloped, the MACD is rising and the trend has been up over the past 5 weeks. There appears to be a cap in the 28 range and expect that it gets tested again next week.

SPY Daily

SPY Weekly

The SPY continued the correction this week, testing the 100 day SMA, before rising back above key support near 128. The volume has slacked off the last two days and the RSI has bounced. Additionally the MACD has leveled. Perhaps the fall is over. But looking at the Bollinger bands, all Thursday and Friday did was get it back in the bands. The weekly chart shows a test of the 20 week SMA and a near hammer candle. But on the downside the RSI is like double diamond ski slope pointing down and the MACD is crossing negative. The next support level comes at the 127.26 Fibonacci level and then the 100 day SMA at 126.15 before the rising trend and previous support near 124.30 from the weekly chart. Look for more downside with a short term possibility of meeting resistance near the 129.50 level.

IWM Daily

IWM Weekly

The IWM ended the week slightly lower and back above support at 79.10. The RSI and MACD on the daily chart are pointing to a continued move higher, but note that the volume has been light during this bounce. A possible bear flag. The weekly chart printed a doji star that touched the rising 20 week SMA, signaling indecision. The RSI and MACD however point strongly to more downside. If it loses the support of the 20 week SMA then the next support levels lower are at 76.75-77.00 and then the neck line of the Inverse Head and Shoulder on the weekly chart at 74.25. Look for more downside with the possibility of hitting resistance first at 80 or 81.57.

QQQQ Daily

QQQQ Weekly

The QQQQ fell to support at the 2007 high at 54.26 and planted itself there this week in a bear flag. The RSI is bouncing along the technically oversold line on the daily chart and the MACD is leveling deep in negative territory. The flag action allowed it to move back within the Bollinger bands. On the weekly chart the RSI and MACD both point lower for the QQQQ as well. If it loses support then the next level down would be 53.50 from the rising trendline and then 52.25. Expect more downside with upside risk to 55.50.

So next week looks for Gold, Crude Oil and US Treasuries to move higher, with the US Dollar Index continuing lower. The Shanghai Composite and Emerging Markets appear to need more time to consolidate with China biased higher and Emerging markets lower. The Volatility Index looks to continue higher and make for an environment where US Equity ETF’s, SPY, IWM and QQQQ, will continue lower for the week if not right form Monday. Use this information 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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