Last week’s review of the macro market indicators suggested heading into the last week of summer and out of expiration week that the equity markets were looking weak again. Elsewhere looked for gold to continue the bounce in its downtrend while crude oil consolidated with a short term bias lower. The US dollar Index) looked better to the downside in consolidation while US Treasuries might reverse higher in the downtrend.
The Shanghai Composite looked to continue in consolidation in the downtrend and Emerging Markets were biased to the downside after their bounce. Volatility iPath S&P 500 VIX Short-Term Futures Exp 30 Jan 2019 (NYSE:VXX) looked to remain above normal levels in its drift down with a chance of a renewed push higher. This would keep the bias flat to lower for the equity index ETF’s SPDR S&P 500 (NYSE:SPY), iShares Russell 2000 (NYSE:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ). Their charts agreed with a downward bias although all were in consolidation ranges, no mans land.
The week played out with gold flagging before a strong move up to end the week higher while crude oil held the range for the week. The US dollar moved slightly higher making a higher high while Treasuries failed in an attempt to move higher. The Shanghai Composite continued to move sideways in a tightening range while Emerging Markets continued lower before finding a slight bid Thursday.
Volatility continued to settle but refuses to move below 20. The Equity Index ETF’s started the week moving lower, but printed Hammers Thursday and started higher Friday only to fail and fall back. What does this mean for the coming week? Lets look at some charts.
SPDR S&P 500 (NYSE:SPY) Daily
The SPY started the week where it left off with a doji over the 20 day SMA. This was at the rising support of an ascending triangle, until this triangle morphed into a broad channel with a price move lower the rest of the week. Thursday it printed a Hammer candle for a potential reversal and Friday looked to confirm it higher with a strong open. But the late day fade to a long red candle failed to confirm the Hammer.
What is worse is the Bollinger Bands® started to open, and are pointing lower. The RSI on the daily timeframe bounced down off of the mid line and the MACD is about to cross down. Things look bearish short term. On the weekly chart the red candle confirms the Shooting Star from last week lower, as it fails to move over rising trend resistance and back into the consolidation box. The RSI on this timeframe is bearish and falling with the MACD falling.
There is support lower at 191.70 and 190.60 before 118.50 and 186.80. Resistance higher comes at 194.50 and 196 followed by 198 and 199.50 before 200. Short Term and Intermediate Term Downward Bias.
As the market closes out the quarter and moves into October the Equity markets still look weak. Elsewhere look for gold to continue in its short term uptrend while crude oil consolidates. The US dollar Index also looks to continue broad consolidation while US Treasuries are biased lower in consolidation. The Shanghai Composite looks to continue its consolidation in the downtrend while Emerging Markets are biased to the downside.
Volatility looks to remain elevated keeping the bias lower for the equity index ETF’s SPY, IWM and QQQ. Their charts suggest there may be more pain with the SPY looking the worst on the short term basis and the IWM and QQQ possibly catching a break and just consolidating. The longer term all look a bit stronger but nothing to have a party about with more downside risk as well. Use this information as you prepare for the coming week and trad’em well.
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