Last week’s review of the macro market indicators looked for Gold and Crude Oil to both continue higher. The US Dollar Index and US Treasuries looked to move higher towards resistance at 77.30 and 97.30 respectively. The Shanghai Composite and Emerging Markets also were biased to the upside, although both have resistance nearby. Volatility looked to remain stable and subdued allowing for the Equity Index ETF’s SPY, IWM and QQQ to continue higher. But each are showing signs of a pullback in the short timeframe that could translate into the weekly timeframe quickly, with Treasuries moving higher as a possible catalyst. Look for upside but keep the stops tight. A reversal could come quickly.
Gold did move higher through the week but with Crude Oil consolidating, ending only slightly higher. The US Dollar Index finished slightly higher after some volatile days and Treasuries rose but gave some back. The Shanghai Composite moved higher while Emerging Markets fell off. Volatility drifted higher but was still contained, as the Equity Indexes drifted lower. What does this mean for the coming week? Let’s look at some charts.
As always you can see details of individual charts and more on my StockTwits feed and on chartly.)
Gold Weekly, $GC_F
Gold continued its run higher extending the streak to nine days and end near the 1600 level. The daily chart shows it breaking out of a range between 1475 and 1560 leading to a target on a measured move to the 1645-1665 area. The Relative Strength Index (RSI) is hugging the 70 level but not extended and the Moving Average Convergence Divergence (MACD) indicator is rising, both supporting more upside. The weekly chart shows too strong candles with a rising RSI and MACD crossing positive. A third long white candle would create a very bullish Three Advancing White Soldiers Pattern. There is room to the upper rail at 1660 within the up channel. Look for more upside next week and a possible test of the intermediate trend at 1635. Any pullback should find support at the 1550-1560 area.
West Texas Intermediate Crude Weekly, $CL_F
Crude Oil consolidated between the 20 and 50 day Simple Moving Averages (SMA’s) for the week. The RSI shows it moving along the mid line and the MACD is slowly waning on the daily chart. The weekly adds to the confusion with a RSI that is also flat but a MACD that is improving. With the SMA’s on the weekly chart sloping higher and lets give the bias slightly to the upside for the coming week but with a good chance of further consolidation. Upside can see resistance at 100 and 104 and support below at 93 and 88.
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US Dollar Index Weekly, $DX_F
The US Dollar Index had a wide range week finishing virtually unchanged. The daily chart shows that it attempted to break out of a symmetrical triangle and then retreated. The RSI is trending lower on the daily chart now and the MACD is oscillating around the zero line. The weekly chart shows the long legged doji falling back within the triangle. Both the RSI and MACD are rising on the weekly chart supporting more upside and a potential test of the 77.30 trend line break. Next week then has a bias to the upside but also with a good chance of consolidation. Upside movement should meet resistance at 77 or 77.30 and a move below the 74.80 mid line of the triangle could add new life to the down trend.
iShares Barclays 20+ Yr Treasury Bond Fund Weekly, $TLT
US Treasuries, measured by the ETF TLT, tested previous resistance and fell back to support at the 50 day SMA. The daily chart shows the RSI turning sharply lower and the MACD falling back as well, suggesting some downside. The weekly chart shows the consolidation between the center line area of the symmetrical triangle formed by the 8 year uptrend and the 30 month down trend resistance, between 95.50 and 97.30. The RSI bounced sharply as the price bounced off the bottom of the range but the MACD is waning. Look for further consolidation within the triangle and a move above 97.30 to test the top rail at 102.5 with a fall below 95.50 to head towards the trend line at 90.
Shanghai Stock Exchange Composite Weekly, $SSEC
The Shanghai Composite continued to consolidate near the 50 day SMA, within the jumble of SMA’s. The RSI in bullish territory on the daily chart with a positive MACD suggest the short term may test the 2900 area. The weekly chart shows the RSI rising and the MACD about to cross higher supporting upside. Look for next week to have the Shanghai Composite move higher with it finding resistance at 2900 and then 2965 above that. Any pullback should find support at the 2800 area or 2700 lower.
iShares MSCI Emerging Markets Index Weekly, $EEM
Emerging Markets, measured by the ETF EEM, confirmed the evening star and long legged doji’s by moving lower on the week. The RSI on the daily chart however held the mid line with the MACD crossing negative. It is mired within all the SMA’s. The weekly chart shows the consolidation in the channel between 44.20 and 48.20 with the RSI and MACD diverging, heading lower and higher. Look for more consolidation in this broad range in the coming week, with a move outside finding resistance at 50 and below at 43.10.
VIX Weekly, $VIX
The volatility Index continued its soft ride higher off of support at 15.67 on the daily chart. The week ended with two long shadowed candles, a tweezers top, suggesting downside to come. The weekly chart shows the range remains intact with both the RSI and MACD hovering around the middle line. Look for a continued low volatility environment in the coming week with a any upside to 24 absorbed and supported by 15.50.
SPY Weekly, $SPY
The SPY moved lower testing the support of the rail of the previous expanding wedge and the long term support/resistance at 131.46. The daily chart shows the RSI hitting the mid line, finding support and moving sideways but the MACD is approaching a cross negative. All of the SMA’s are converging. The weekly chart shows the range between 126 and 136 in tact with the RSI moving lower again but the MACD improving. Look for the coming week to be biased to the downside but with support at 131.46 and 130 below before the bottom of the range. Any move to the upside needs to clear 135.90 and 136.50 to change from consolidation to uptrend.
IWM Weekly, $IWM
The IWM moved lower also testing the support of the rail of the previous expanding wedge and just above the long term support/resistance at 81.57. The daily chart shows the RSI hitting the mid line, finding support and bouncing but the MACD is approaching a cross negative. All of the SMA’s are converging here as well. The weekly chart shows the range between 77 and 86 in tact with the RSI moving lower again but the MACD improving. Look for the coming week to be biased to the downside but with support at 81.57 and 81 below before the bottom of the range. Any move to the upside needs to clear 84.50 and 86 to change from consolidation to uptrend.
QQQ Weekly, $QQQ
The QQQ moved lower near the support of the rail of the previous expanding wedge and at the convergence of the 20, 50, 100 and 144 day SMA’s. The daily chart shows the RSI hitting the mid line, finding support and bouncing but the MACD is approaching a cross negative. The weekly chart shows the range between 54.26 and 60 in tact with the RSI moving lower again but the MACD improving. Look for the coming week to be biased to the downside but with support at 56 and 55.50 below before the bottom of the range. Any move to the upside needs to clear 58.74 and 60 to change from consolidation to uptrend.
Next week then looks for Gold to continue its run higher and for Crude Oil to continue to consolidate with a bias for any breakout to the upside. The US Dollar Index looks ready to move higher but could consolidate further, while US Treasuries move sideways. The Shanghai Composite looks ready to break the flag higher while Emerging Markets consolidate in a broad range between 44.2 and 48.2. Volatility looks to remain subdued but despite this Equity Index ETF’s, SPY, IWM and QQQ look biased to the downside in their broad ranges, but near support. A true stock pickers market. Use this information to understand the major trend and how it may be influenced as you prepare for the coming week ahead. Trade’m well.
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