Last week’s review of the macro market indicators suggested, heading into the Memorial Day Weekend, that the equity markets looked healthy, but remained short of break outs.
Elsewhere looked for gold to continue to consolidate with a short term upward bias, while crude oil consolidated in its uptrend. The US dollar index looked to continue to pullback, while US Treasuries (ARCA:TLT) bounced in their downtrend. The Shanghai Composite was in broad consolidation mode, while Emerging Markets (ARCA:EEM) consolidated with an upward bias in their uptrend.
Volatility looked to remain subdued with a bias lower keeping the bias higher for the equity index ETF’s SPDR S&P 500 (ARCA:SPY), iShares Russell 2000 (ARCA:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ). Their charts were all still more positive on the longer timeframe, but the SPY and QQQ looked stronger than the IWM. This might yield an opportunity in the IWM to catch up.
The week played out with gold falling back toward 1200, while crude oil continued to hold in the consolidation range from 58.50 to 62. The US dollar found support and bounced while Treasuries tested lower, finding support as well before a small bounce. The Shanghai Composite moved higher to a new 7 year high, while Emerging Markets consolidated sideways in a tight range.
Volatility moved lower, making a new low for the year, before rebounding slightly. The Equity Index ETF’s were all positive but mixed, with the SPY setting a new all-time high, and the IWM and the QQQ close to their recent all-time and 15 year highs. What does this mean for the coming week? Lets look at some charts.
SPY Daily
The SPY moved over the long ascending triangle Monday, and then consolidated at the new highs all week. Wednesday printed a new intraday high level, then Thursday a new all-time closing high, before an inside day Friday. The daily chart now has a move higher to consolidation and a Measured Move over that to 217.80. There is also a larger target above that at 221 from the triangle break.
The RSI remains in the bullish zone with the MACD slowly rising, maybe flattening. These continue to support the bullish case. As do the rising Bollinger Bands®. Skeptics will point to the volume decline, but that is also a bullish indication that the consolidation might show itself to be a bull flag and leap higher.
On the weekly chart, the small move out of the consolidation zone is significant, but also shows how easily it could pull back in. The RSI on this timeframe is rising and bullish and the MACD crossed up, again both supporting the bull case along with the rising Bollinger Bands. There is no resistance higher over the highs made this week, and support lower comes at 212.50 and 211 followed by 210.25 and 209. Continued Uptrend.
SPY Weekly
Heading into the unofficial start of summer, the equity markets look positive and better in the longer time frame than the shorter one. Elsewhere, look for gold to continue to hold near 1200, while crude oil consolidates with an upward bias. The US dollar index is biased to the upside, but it is still too soon to declare a reversal higher while US Treasuries are biased lower but showing signs of consolidation. The Shanghai Composite is moving higher in renewed strength, and Emerging Markets are biased to the downside in the uptrend, debating whether it is a bull flag or a reversal.
Volatility looks to remain subdued, keeping the bias higher for the equity index ETF’s SPY, IWM and QQQ. Their charts agree with that on the weekly timeframe, but show better strength on the SPY and QQQ on the daily timeframe than in the IWM. Use this information as you prepare for the coming week and trad’em well.
Disclaimer: 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.