Running into the Memorial Day Weekend, last week’s review of the macro market indicators suggested that the equity markets continued to look strong, but with the potential for rotation into the small caps noted the previous week still showing. It looked for Gold to continue the trend lower, while Crude Oil was biased higher in its neutral channel. The U.S. Dollar Index was on the verge of a full blown bullish move higher, while U.S. Treasuries were biased lower. The Shanghai Composite also looked to be ready to move back higher, while Emerging Markets were biased to the downside as they consolidated. Volatility looked to remain a non-factor and should be ignored until it breaks above 22, keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ, despite the moves to new highs. Their charts agreed, although the SPY was showing the most signs of caution as the IWM and QQQ plow forward.
The week played out with Gold holding its ground. Crude Oil moved up early, only to pull back later in the week. The U.S. Dollar consolidated higher, while Treasuries did the same at their recent lows. The Shanghai Composite made a higher high before pulling back, while Emerging Markets broke there consolidation lower. Volatility bounced off of the lows again, but remained subdued. The Equity Index ETF’s made new all-time and closing highs on the SPY and IWM with multi-year highs on the QQQ before starting a pullback mid-week.
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