Last week’s review of the macro market indicators suggested heading into the Holiday shortened week that the equity markets had seen consolidation following the damage of the prior week, and traders were lining up on both sides looking for a break. Elsewhere looked for gold to continue lower while crude oil had a short term bias to the upside. The US dollar continued in consolidation with an upward bias while US Treasuries were also biased higher in the short term. The Shanghai Composite and Emerging Markets were biased to the downside. Volatility looked to remain elevated keeping the bias 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) into next week. Their charts all showed short term consolidation in a tightening range as all correlations went toward 1.0 in thhe crisis or panic. The longer charts showed the damage to be limited so far though. The QQQ looked the strongest with the IWM at support and the SPY most vulnerable.
The week played out with gold continuing lower while crude oil seemed to have found support and consolidated. The US dollar pulled back in consolidation while Treasuries continued the drift lower. The Shanghai Composite settled into consolidation along with the Emerging Markets. Volatility continued to hold over the key 22 level suggesting there is no safety yet. The Equity Index ETF’s all started higher Tuesday but then failed to gain any further ground and moved sideways. What does this mean for the coming week? Lets look at some charts.
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