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 heading into Memorial Day Weekend, the unofficial start of summer, equity markets remained in consolidation. Elsewhere, look for Gold (GLD) to possibly confirm a reversal higher while Crude Oil (USO) pulled back hard in the uptrend. The US Dollar Index (DXY) looked to continue to move to the upside while US Treasuries (TLT) raced higher in the short term.
The Shanghai Composite (ASHR) looked to have resumed the downtrend and Emerging Markets (EEM) continued to hold over support, marking time. Volatility (VXX) looked to remain at very low levels keeping the bias higher for the equity index ETFs: SPDR S&P 500 (NYSE:SPY), iShares Russell 2000 (NYSE:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ). Despite that good news, equities continued to plod along sideways, for the most part. The longer time frame remained constructive with the IWM leading in the shorter time frame but the QQQ looking to catch up.
The week played out with gold finding resistance and stalling on a retest of the breakdown level while crude oil found support and consolidated. The US dollar continued higher until bouncing at the November high while Treasuries also stalled their run higher, at the March high. The Shanghai Composite moved lower, gapping down mid week to test the April lows while Emerging Markets made a lower low but recovered late in the week.
Volatility popped up to the high teens early in the week but then proceeded back to low levels, putting the bias back higher for equities. The Equity Index ETFs responded positively to the volatility reversal, with the IWM moving to new all-time highs and the QQQ just a fraction away form one itself. The SPY did move higher but stalled at resistance for the 3rd time. What does this mean for the coming week? Lets look at some charts.
SPY Daily
The SPY was drifting lower from resistance, in consolidation, as the week began. It broke to the downside and through the 20 day SMA Tuesday, ending the 2 week sideways motion. Wednesday it started higher, moving back over the 20 day SMA and it continued, ending the week higher and back at resistance. The daily chart shows the RSI moving back higher in the bullish zone. The MACD had been level and is now turning up towards a cross.
The weekly chart shows a longer body candle after two tight candles. The Bollinger Bands® are moving sideways with room above for a move. The RSI is drifting up off of the mid line with the MACD about to cross up, and positive. There is resistance at 274.25 and 277.50 followed by 279 and 280. Support lower comes at 272.50 and 271.40 then 269 and 267.50. Continued Consolidation.
SPY Weekly
As June begins, the equity markets are looking stronger with small caps and tech leading the way higher. Elsewhere, look for gold to continue to move lower while crude Oil joins it continuing its drop. The US Dollar Index continues to show strength, but pausing in its move higher while US Treasuries are biased lower in a channel. The Shanghai Composite is drifting lower as are Emerging Markets, with the former closing in on a new 52 week low while the latter is just retesting a major break out.
Volatility looks to remain subdued keeping the bias higher for the equity index ETFs SPY, IWM and QQQ. The IWM has shown strength making new all-time highs while the QQQ looks to be ready to takeover leadership for the short run. The SPY however is holding at resistance. A break out would be a major spark to the broad market. Use this information as you prepare for the coming week and trad’em well.
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