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 suggested heading into September Options Expiration the series of higher lows on the short term charts were showing some promise for equities. Elsewhere looked for gold to continue lower while Crude Oil consolidated building a bull flag.
The US Dollar Index was also consolidating with a short term downward bias while US Treasuries were biased lower. The Shanghai Composite and iShares MSCI Emerging Markets (NYSE:EEM) looked to continue their consolidation with a bias lower.
CBOE Volatility Index looked to remain elevated but continuing the leak lower, with a possibility of a reversion to normal levels soon. This would lighten the bias lower 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), and work toward no bias. The ETF’s themselves were showing short term consolidation with reversal signs after a plunge.
But the move out of consolidation could be in either direction so a wait and see approach with an upward short term bias was my view. Longer term a break of consolidation to the upside would be quite bullish. The QQQ remained the strongest of the indexes with the IWM and SPY showing bigger risk to the downside.
The week played out with gold starting lower before finding support and rebounding to end the week up while crude oil broke the bull flag to the upside but that failed. The US Dollar started to the upside but then faded to end lower while Treasuries moved lower before a post Fed rally.
The Shanghai composite continued its month long consolidation while Emerging Markets pushed higher before some profit taking to end the week. Volatility continued the drift lower with a slight bounce to end the week.
The Equity Index ETF’s all started the week moving higher but fell hard after the Fed announcement, with the SPY and QQQ giving back all of the gains, and only the the IWM finishing positive on the week. What does this mean for the coming week? Lets look at some charts.
SPY Daily
The SPY started the week nonchalantly in a sideways move. But by Tuesday it was moving higher and broke above the ascending triangle that had formed since the August 24 low early Thursday. After the Fed announcement it continued higher, touching the upper Bollinger Band® before a quick pullback inside the triangle. This followed through lower Friday to the bottom of the triangle.
The volume both Thursday and Friday was large, rivaling the August 24th sell off volume. The daily chart shows the RSI touched the mid line and turned back lower. The trend in the RSI is up but the short term is biased lower. The MACD also found a top and is starting back down. On the weekly chart the spike probed back into the consolidation box, over the prior support line and over the 100 week SMA. The real body creates a Harami in a tighter range.
The RSI on this timeframe is bouncing off of the oversold level and the MACD is falling. There is support lower at 194.30 and 191.70 followed by 190 and 188.5. Resistance higher comes at 196 and 198 followed by 199.5 and 200 before 201.70. Consolidation of the August Plunge with a Downward Bias.
SPY Weekly
Heading into the last week of summer and out of expiration week the equity markets are looking weak again. Elsewhere look for gold to continue the bounce in its downtrend while crude oil slows consolidates with a short term bias lower. The US dollar index looks better to the downside in consolidation while US Treasuries may reverse higher in the downtrend. The Shanghai Composite looks to continue consolidation in the downtrend and Emerging Markets are biased to the downside after their bounce.
Volatility looks to remain above normal levels in its drift down with a chance of a renewed push higher. This would keep the bias flat to lower for the equity index ETF’s SPY, IWM and QQQ. their charts agree with a downward bias although all are in consolidation ranges, no mans land. 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.