Last week’s review of the macro market indicators suggested heading into August Options Expiration week that equity markets looked to be consolidating in the short term and better long term. Elsewhere looked for gold to continue the bounce in its downtrend, while crude oil just continued lower. The US dollar index seemed content to move sideways, but with a short term downward bias, while US Treasuries were biased higher. The Shanghai Composite looked to continue to consolidate in the longer uptrend, while Emerging Markets looked ugly with more downside to come. Volatility looked to remain subdued, keeping the bias higher for the equity index ETFs NYSE:SPY, NYSE:IWM and NASDAQ:QQQ, despite their failure to move higher last week. Their charts showed weakness continuing in the IWM and consolidation in the SPY and QQQ short term. All looked better longer term, with the QQQ strongest followed by IWM and then SPY.
So a hint of weakness was clearly an understatement. The week played out with gold thrusting higher, while crude oil continued the move lower. The short term downward bias played out in the US dollar, while Treasuries bounced in a range ending slightly higher. The Shanghai Composite held up early in the week until falling off to new 1 month lows, while Emerging Markets continued lower making a new 6 year low. Volatility jumped to levels not seem since the October 2014 market low. The Equity Index ETFs started the week continuing in their recent ranges, but the IWM started to crack to the downside Wednesday. The SPY and QQQ followed suit Thursday and it turned into a bloodbath, with all 3 finishing at new 6 month lows.
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