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 noted heading into the last quiet week before earnings season that the equity markets had weathered a short term drizzle (SPY (NYSE:SPY) and IWM (NYSE:IWM)) or mild rainstorm (QQQ (NASDAQ:QQQ)) and looked solid on the longer timeframe. Elsewhere looked for gold to move lower as it broke support while Crude Oil (USO (NYSE:USO)) also continued lower short term.
The US dollar index continued to look weak and better to the downside while US Treasuries (TLT) continued to move lower. The Shanghai Composite (ASHR (NYSE:ASHR)) looked to continue the trend higher as Emerging Markets (EEM (NYSE:EEM)) marked time sideways in the uptrend. Volatility (VXX (NYSE:VXX)) looked to remain at very low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Longer term their charts agreed. Short term they were all consolidating and holding over support zones.
The week played out with gold starting the week lower but quickly rebounded to end the week up while Crude Oil also found support Monday and reversed during the week. The US Dollar moved down to a nine month low while Treasuries found support and bounced but stayed in a tight range. The Shanghai Composite moved sideways while Emerging Markets ripped out of consolidation to the upside, gaining over 5%.
Volatility moved lower, testing the support since May. The Equity Index ETF’s all improved on the week, with the SPY closing at an all-time high. The QQQ started higher Monday and ran up all week. The SPY was a little slower, really starting to move Wednesday, and the IWM did not break to the upside until Wednesday when it joined the party. What does this mean for the coming week? Lets look at some charts.
SPY Daily, SPY
The SPY had moved off of the bottom of a falling channel or bull flag to end the prior week, and Monday saw a continuation of that move up. But Tuesday printed a doji candle, signaling indecision, with the real body inside that of the Monday candle and still below the 20 day SMA. It looked to be stalling. But Wednesday saw a gap up over the flag and the 20 day SMA. It continued Thursday and then added a strong candle Friday to finish the week at a new all-time high.
The daily chart shows it is out of the Bollinger Bands®, but barely, as they open to the upside. The RSI is rising in the bullish zone with a lot of room to go higher and the MACD is rising and bullish after crossing up Wednesday. The break of the flag adds a target to 250.50. It looks very strong on the shorter timeframe.
On the weekly chart the break of the bull flag is evident. On this timeframe price is just reaching the upper Bollinger Band, not extended. The RSI is bullish and strong as the MACD is about to cross up. There is no resistance higher and support lower comes at 245 and 242 then 240 and 238. Continued Uptrend.
SPY Weekly, SPY
Heading into July options expiration and the height of summer earnings, the equity markets are looking very strong. Elsewhere look for gold to continue its recent move higher while Crude Oil bounces in a channel. The US Dollar Index continues to look weak while US Treasuries continue their consolidation in a channel. The Shanghai Composite remains in a slowly rising uptrend as Emerging Markets continue their break out to the upside.
Volatility looks to remain at extremely low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts support this view as well on both the daily and weekly timeframes. Use this information as you prepare for the coming week and trad’em well.
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.