Last week’s review of the macro market indicators suggested heading into the last full week of August, the Equity markets looked horrible, ready for more downside. Elsewhere looked for gold to continue in its uptrend, while crude oil continued lower. The US dollar index was consolidating sideways with a downward bias, while US Treasuries were biased higher. The Shanghai Composite and Emerging Markets were biased to the downside with risk of the Chinese market running sideways in consolidation. Volatility looked to remain elevated above the prior stable period, but I noted it usually does not hold these levels long. This would keep the bias lower for the equity index ETF’s NYSE:SPY, NYSE:IWM and NASDAQ:QQQ, in the short run. Their charts suggested the downside move was not over either, but all were very oversold and could see short term bounces early in the week.
The week played out with gold starting higher before meeting resistance and falling back, while crude oil started lower but rebounded sharply late in the week. The US dollar moved lower early and reversed, while Treasuries found trouble after a gap up open Monday and fell the rest of the week. The Shanghai Composite started to the downside and bounced to end the week, while Emerging Markets finally met some support and started back higher. Volatility spiked over 50 before settling back but still in an elevated state. The Equity Index ETF’s started the week with a huge gap down in response, before bouncing Tuesday and the retracing the move the rest of the week to close flat to higher on the week.
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