USD Fell Back To Support Before Rallying On Friday

S&P 500 Monthly Chart

Last week’s review of the macro market indicators noted that with August Options Expiration in the rear view mirror, the equity markets were looking settled and stable, digesting their moves higher. Elsewhere looked for gold to consolidate with an upward bias in its uptrend while crude oil continued to pump higher. The US dollar index looked to continue lower in its broad consolidation while iShares 20+ Year Treasury Bond (NYSE:TLT) were biased lower in their short term consolidation.

The Shanghai Composite looked to continue higher but iShares MSCI Emerging Markets (NYSE:EEM) looked ready to consolidate or pullback short term in their uptrend. iPath S&P 500 VIX Short-Term Futures Exp 30 Jan 2019 (NYSE:VXX) looked to remain at abnormally 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 suggested more sideways motion in the short term with the possible exception of the IWM which was drifting higher. Longer term, the topping candles suggested a pause or pullback may be in order soon.

The week played out with gold moving sideways but then dropping late to end the week down while crude oil pulled back in the uptrend. The US dollar fell back to support before rallying Friday while Treasuries bounced slightly but then ended the week with a pull back. The Shanghai Composite digested the move higher in a consolidation while Emerging Markets pulled back.

Volatility made a move higher back to normal levels. The Equity Index ETF’s started the week moving sideways but then all moved lower in to the Jackson Hole speech. They all rallied Friday morning only to give up all the gains and more later in the day ending near the week’s low. What does this mean for the coming week? Lets look at some charts.

SPY (NYSE:SPY)

SPY Daily Chart

The SPY started the week coming off of a two week period of narrow range days covering just over a 1% range. Nothing changed at the start of the week as it added another one Monday before a push to a new intraday high Tuesday that sold off. That added 10 cents to the range. Wednesday was more of the same and then Thursday saw a break below the 20 day SMA. This was the first time there since June 29th. Friday printed a Spinning Top doji also under the 20 day SMA, but closing the gap from August 4th. This also touched the lower Bollinger Band® before bouncing.

Not much price change for the week but added weakness. The daily chart shows the RSI continued lower and is now at the mid line, still bullish but falling. The MACD is falling too. Moving out to the weekly timeframe shows the small red candle holding over the minor breakout level. The RSI on this timeframe is rolling lower but bullish while the MACD is leveling. There is resistance above at 218 and 219 followed by 219.50. Support lower comes at 217 and 215.70 followed by 215 and 213. Pause and Potential Pullback in the Uptrend.

SPY Weekly

SPY Weekly Chart

Heading into the unofficial last week of Summer ahead of the Labor Day holiday the Equity markets are tired, consolidating at their highs and even pulling back. Elsewhere look for Gold to continue lower while Crude Oil extends to the upside. The US Dollar Index looks to continue higher short term in its broad range while US Treasuries are biased lower in consolidation.

The Shanghai Composite and Emerging Markets are both looking like they will continue lower in the short run, more damaging for the Emerging Markets than the Chinese. Volatility looks to remain subdued but back at more normal levels keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts have lost all their strength though and suggest they may continue to pause or pullback in the short run. 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.

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