A weekly excerpt from the Macro Review analysis sent to subscribers on 10 markets and two timeframes.
Last week’s review of the macro market indicators noted that heading into the dog days of August the equity markets looked strong. Elsewhere looked for Gold to continue lower short term in the uptrend while Crude Oil bounced in the downtrend. The US Dollar Index looked to continue higher in the broad consolidation while iShares 20+ Year Treasury Bond (NYSE:TLT)were biased lower. The Shanghai Composite looked to continue to move sideways in a narrow range while iShares MSCI Emerging Markets (NYSE:EEM) continued higher.
iPath S&P 500 VIX Short-Term Futures Exp 30 Jan 2019 (NYSE:VXX) looked to remain at extremely low levels keeping the bias higher 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). Their charts agreed on both the daily and weekly timeframe. If you ranked them the QQQ was the most ready for a pause or retrench, possibly handing the baton to the IWM.
The week played out with Gold quickly finding support and rebounding to end the week up while Crude Oil accelerated the move higher. The US Dollar started the week moving higher but reversed to end lower while Treasuries found support Monday at the 50 day SMA and bounced. The Shanghai Composite crept higher while Emerging Markets stuck with their uptrend, rising all week.
Volatility continued to hold at unusually low levels. The Equity Index ETF’s started the week drifting sideways in a tight range, and that continued throughout the week. A small midweek dip was bought and a marginal new all-time high in the SPY (NYSE:SPY) highlighted the week, with the QQQ holding just under all-time highs and the IWM needing to play some catch up. In summary, a pretty low key week. What does this mean for the coming week? Lets look at some charts.
SPY Daily
The SPY spent the week in a very narrow range, holding above its 20 day SMA. There was only 1 day where the range exceeded 1 point and that day, Wednesday, it was 1.17 points. That is tight. During the week it managed to make a new all-time high close and intraday on Thursday.
The daily chart sees the Bollinger Bands® squeezing in, often a precursor to a move. The RSI is running sideways in the bullish zone. The MACD has pulled back slightly and is now running sideways. All bullish here. On the weekly chart it printed a doji. A sign of indecision. On this timeframe though the Bollinger Bands are open to move higher and the RSI is bullish and rising with a MACD rising too.
There is no resistance above the all-time high at 218.94, but a price objective from the short term Inverse Head and Shoulders remains to at least 222.70. Support lower comes at 217 and 215.70 followed by 215 and 214. Options Open Interest for August is far and away the biggest at the 220 strike. This could draw price higher next week. Continued Upward Price Action With a Possible Short Term Pause.
SPY Weekly
Heading into August options expiration the Equity markets continue to look strong but maybe in need of a short term pause. Elsewhere look for Gold to consolidate in its uptrend while Crude Oil rises. The US Dollar Index seems content to move sideways in broad consolidation while US Treasuries consolidate near their high. The Shanghai Composite and Emerging Markets are both biased to the upside next week.
Volatility looks to remain at abnormally low levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts show that the SPY and IWM may need a pause or retrenchment in the short term, while the QQQ continues to lead. Use this information as you prepare for the coming week and trad’em well.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.