Last week’s review of the macro market indicators noted that with Options Expiration and the June FOMC meeting in the rear view mirror equities looked to emerge on the other side mainly unscathed.
There was consolidation in the SPY (NYSE:SPY) and Russell 2000 (NYSE:IWM) but perhaps more damage in the QQQ (NASDAQ:QQQ). Elsewhere looked for gold to continue to pullback while crude oil trended lower. The US Dollar Index had moved to consolidation in its pullback while US Treasuries (NASDAQ:TLT) were biased to continue higher.
The Shanghai Composite and Emerging Markets (NYSE:EEM) were biased to the upside with the Chinese market drifting up, while Emerging Markets consolidated in their longer trend up. Volatility looked to remain at abnormally low levels keeping a breeze at the backs of equities. Their charts showed continued strength in all 3 Index ETF’s on the longer timeframe but consolidation in the SPY and pullbacks in the IWM and QQQ on the shorter timeframe.
The week played out with gold starting lower and quickly finding support before rebounding to end the week nearly unchanged while crude oil continued to move lower. The US dollar continued to mark time moving sideways while Treasuries continued to move higher. The Shanghai Composite drifted higher to resistance while Emerging Markets consolidated in a tight range at the recent highs.
Volatility had an uneventful week with the VIX bouncing between 10 and 11. The Equity Index ETF’s all started the week strong, but then turned mixed, with the SPY giving back most of the gains, the IWM all of them before a bounce at the end of the week and the QQQ holding up and pushing slightly higher. What does this mean for the coming week? Lets look at some charts.
SPY Daily, SPY
The SPY started the week with a gap up, just shy of its all-time high. Tuesday saw it give back the gain and Wednesday close the gap. It finished under the 20 day SMA. It held there the rest of the week, marking time. As it did the Bollinger Bands® are squeezing in. This is often a precursor to a move. The daily chart shows a mixed picture in regards to momentum. The RSI is holding in the bullish zone and reversing higher. But the MACD has crossed down and is continuing lower.
On the weekly chart the third small body consolidation candle printed in a row. The RSI on this chart is strong in the bullish zone while the MACD is flat. There is resistance at 245 and a Measured Move to 248 above that. Support lower sits at 242 and 240 followed by 238. Consolidation in the Uptrend.
SPY Weekly, SPY
As the markets head into the end of the second Quarter of the year, the equity markets remain strong on both timeframes and poised for more upside. Elsewhere look for gold to participate to the upside while crude oil continues the trend lower. The US Dollar Index remains marking time in consolidation while US Treasuries continue higher. The Shanghai Composite and Emerging Markets both look to continue uptrends, although Emerging Markets may need some further consolidation first.
Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts look stronger on the weekly timeframe than the shorter one. And on that shorter timeframe the IWM and QQQ look set to outperform the SPY next week. 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.