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 as the calendar turned from April to May the equity markets were floundering. They could sure use some May flowers after all the spring rain. Elsewhere looked for Gold (SPDR Gold Shares (NYSE:GLD)) to continue its broad consolidation while Crude Oil (United States Oil (NYSE:USO)) remained in an uptrend. The US Dollar Index (DXY) was showing signs of life and attempting to reverse higher while US Treasuries (TLT) were bouncing in their downtrend.
The Shanghai Composite (ASHR) looked weak and possibly on the verge of a big move lower while Emerging Markets (EEM) continued to churn at the highs. Volatility (VXX) looked to drip lower and out of the nearly 3 month range, which would be a positive for equities. The equity index ETFs SPDR S&P 500 (NYSE:SPY), iShares Russell 2000 (NYSE:IWM) and PowerShares QQQ Trust Series 1 (NASDAQ:QQQ), all seemed stuck in tightening consolidation and holding over important support on the longer time frame.
The week played out with gold cracking down below the bottom of the range, retesting the low, while crude oil dashed and then crashed only to dash higher to resistance again. The US dollar moved up over its 200 day SMA for the first time in a year, while Treasuries meandered in a tight range. The Shanghai Composite consolidated under its 20 day SMA clinging to support while Emerging Markets drifted lower to support in their consolidation.
Volatility held held steady all week around 15 with a few spikes that failed both ways. This eased the pressure for equities. The Equity Index ETF’s drifted lower on the week, until Friday when they all had strong trend days higher. This left the IWM and QQQ higher on the week and the SPY slightly behind. What does this mean for the coming week? Let's look at some charts.
SPY Daily
The SPY came into the week following a short term 3 day move to the upside. Monday it started lower and continued until Thursday when it printed a Hammer candle after recovering over the 200 day SMA. It confirmed as a reversal Friday with a strong candle higher closing over the 20 day SMA. In all it was a tight range for the week compared to some recent weeks.
Price remains in a range giving no real guidance as to whether the next move is to the upside or to the downside. It needs to move over 268 to make a first higher high and then 271.40 to confirm a change higher. Or a drop under 252 for a downtrend. The RSI on the daily chart is trying to move higher over the mid line, with the MACD flat and slightly negative. The Bollinger Bands® are moving sideways and there is some minor squeezing developing.
The weekly timeframe sees another doji with a long lower shadow. This is the 3rd doji in a row, reaching down to touch the 50 week SMA. The RSI is holding at the mid line with the MACD leveling as it approaches zero. Momentum remains in bullish ranges. There is resistance at 267.50 and 269 then 271.40 and 272.50 before 275. Support lower comes at 265 and 262.50 followed by 260 and 257.80. Continued Consolidation.
SPY Weekly
As May begins equity market continue to move sideways in consolidation without any energy but a slightly improving picture. Elsewhere look for gold to hold or bounce off of support in its range while crude oil continues higher. The US dollar Index continues to show strength in the short term moving higher while US Treasuries are consolidating at a lower high, a possible Dead Cat Bounce. The Shanghai Composite is consolidating in a downtrend clinging to support while Emerging Markets continue to retrench in the uptrend.
Volatility looks to remain low and more stable taking pressure off of the equity index ETF’s SPY, IWM and QQQ. Their charts all ended the week stronger on the shorter time frame and in consolidation near the top on the longer time frame. In the short term the QQQ and IWM look a bit stronger than the SPY. 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.