Last week’s review of the macro market indicators suggested as the books closed on 2015 and we prepped for 2016 that the equity markets were showing a lack of strength at best and some weakness short term. Elsewhere looked for consolidation to rule the short term. In gold it looked for consolidation in the downtrend with crude oil also consolidating its move lower. The US dollar index looked to consolidate in the uptrend while US Treasuries just continued broad consolidation sideways marking time.
The Shanghai Composite looked to continue its sideways motion while Emerging Markets were biased to the downside in consolidation. Volatility looked to remain subdued keeping the bias higher for the equity index ETFs N:SPY, N:IWM and O:QQQ. Their charts looked to move into the new year showing further consolidation in the long run but with some weakness in the short run, especially in the SPY.
The week played out with gold immediately pushing higher while crude oil melted down lower. So much for consolidation. The US dollar started the week moving higher but gave it all back while Treasuries pushed higher but both remained in consolidation. The Shanghai Composite took center stage but not until late in the week with a dumping while Emerging Markets continued lower, printing new 6 year lows.
Volatility pushed higher back to the pre-Christmas highs. The Equity Index ETFs halted started the week in consolidation but quickly headed lower, with the SPY falling below 200 and giving up nearly 6%, while the IWM and the QQQ fared even worse. All this made for the worst opening week for a year in the markets ever.
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