Last week’s review of the macro market indicators suggested heading into the unofficial last week of summer, the equity markets had dodged a bullet, but still needed to prove they had the strength to continue and not get pulled lower. Elsewhere looked for gold to continue to bounce in its downtrend, while crude oil continued higher. The US dollar index was biased to the upside in consolidation, while US Treasuries were biased lower. The Shanghai Composite and Emerging Markets both looked to continue their bounce in the downtrends, and might turn into reversals. Volatility looked to remain elevated keeping the bias lower for the equity index ETFs NYSE:SPY, NYSE:IWM and NASDAQ:QQQ, despite their rebounds higher last week. Their charts all showed signs of both promise to the upside but further risk of another turn lower. Best to keep all long trades on a tight leash.
The week played out with gold holding in a tight range with a downward drift toward the end of the week, while crude oil jumped to start the week and then held. The US dollar started lower but mid week turned higher, while Treasuries pulled back to support and then bounced. The Shanghai Composite had a short week but spent it drifting lower, while the bounce in Emerging Markets ended as well. Volatility refused to move lower, or higher, holding in the higher range. The Equity Index ETFs started the week at last week's high before moving to a higher low and bouncing back to a lower high. A tightening range, with the SPY, the IWM and the QQQ all moving that way.
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