A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.
Last week’s review of the macro market indicators suggested, heading into the January Options Expiration week that the equity markets looked at best to be consolidating. Elsewhere looked for Gold to bounce higher in the possible bottoming while Crude Oil continued lower. The US Dollar Index looked ready to pause or pullback in its uptrend while iShares Barclays 20+ Year Treasury (ARCA:TLT) were biased higher.
The Shanghai Composite was also ready for a pause or short term pullback in the uptrend while iShares MSCI Emerging Markets (ARCA:EEM) were consolidating and biased to the downside. CBOE Volatility Index looked to remain subdued but perhaps slightly drifting up, keeping the bias higher for the equity index ETF’s SPDR S&P 500 (ARCA:SPY), iShares Russell 2000 Index (ARCA:IWM) and PowerShares QQQ (NASDAQ:QQQ), but less so marginally. Their charts suggested some consolidation is in order and perhaps a short term pullback.
The week played out with Gold pushing higher all week while Crude Oil made another thrust lower before bouncing back and holding. The US Dollar continued its run higher to end the week while Treasuries added another leg up to new all-time highs. The Shanghai Composite consolidated for a brief moment before making new highs while Emerging Markets hovered under resistance. Volatility bounced up to the recent highs but not over that level. The Equity Index ETF’s all continued lower, taking out the early January lows before a bounce Friday.
What does this mean for the coming week? Lets look at some charts.
SPY Daily
SPY Weekly
The SPY started the week moving lower. This made for a lower high on the daily chart. It continued lower to the lower Bollinger Band and then consolidated. The move higher Friday hardly gives up the short term downward trend, but continuation next week would confirm that. For now it has made a lower low as well, confirming the short term downtrend. The daily chart sports a RSI that is turning back higher but the MACD is still running lower. A mixed bag on this timeframe.
Moving out to the weekly chart the ‘craziness’ shows up as a consolidation since the start of November. The RSI is in the bullish zone, but falling while the MACD is crossed down and falling. This foretells the risk of a pullback. Support lower may come at 200 and 198.60 followed by 196.60. Resistance may come at 201.80 and 204.20 followed by 206.40. Consolidation in the Uptrend with a Risk of Pullback.
Heading into another holiday shortened week, the equity markets still look a bit vulnerable to more pullback. Elsewhere look for gold to continue its uptrend while crude oil consolidates in the downtrend. The US dollar Index looks to continue higher along with US Treasuries. The Shanghai Composite looks to resume its move higher despite being very overbought while Emerging Markets continue to consolidate in a bear flag in the downtrend.
Volatility looks to remain low but creeping higher making a headwind for the equity index ETF’s SPY, IWM and QQQ. Their charts show differing reactions with the IWM consolidating in the top of its year long range, and the SPY trying to reverse a pullback, while the QQQ looks biased lower in the short run. Longer term the SPY and QQQ remain in uptrends while the IWM consolidates. Use this information as you prepare for the coming week and trad’em well.
Disclaimer: 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.