Last week’s review of the macro market indicators noted as the market moved through March Options Expiration the equity markets had shifted gears into consolidation with the exception of the QQQ. Elsewhere looked for Gold ($GLD) to continue to pullback in its uptrend while Crude Oil ($USO) moved higher. The US Dollar Index ($DXY) looked to move lower in broad consolidation while US Treasuries ($TLT) stalled under resistance.
The Shanghai Composite ($ASHR) and Emerging Markets ($EEM) were back in consolidation mode, moving sideways. Volatility ($VXXB) looked to sit at very low levels, giving support to equities to continue higher. Their charts showed the $SPY and $IWM taking a pause in the shorter timeframe while the $QQQ continued to blast higher. On the longer timeframe all 3 had recovered from their 1 week pullback and continued to show strong uptrends.
The week played out with Gold drifting slightly higher while Crude Oil also moved higher until profit taking at the end of the week. The US Dollar moved lower but found support mid week and reversed while Treasuries started to drift higher and then exploded to the upside Friday. The Shanghai Composite consolidated at the recent highs while Emerging Markets made a marginally higher high before a Friday slump.
Volatility drifted to 5 month lows before waking up Friday, putting some pressure on equities. The Equity Index ETF’s all started stable and then sold off into the FOMC Meeting only to surge Thursday and fall back Friday all news driven. It is starting to be the season for riding roller coasters isn’t it? What does this mean for the coming week? Let’s look at some charts.
SPY Daily, $SPY
The SPY came into the week sitting at the top of a resistance that has held since the beginning of October. It slowly pushed higher and Thursday gathered some strength to close at a 5 ½ month high. Friday gave up those gains as it fell back under resistance and to the 20 day SMA.
The move took it back from the top of the Bollinger Bands®. It also had the RSI drop from the edge of being overbought but it remained solidly in the bullish zone. The MACD is flat but with a possible start of a turn lower. A weak end to the week but not enough to end the uptrend.
The weekly chart now looks like a 3 week consolidation but with an upper shadow on the last week. The RSI is holding under 60, still without a strong confirmation of bullishness, while the MACD is positive and rising. There is resistance at 280 and 282 then 284 and 285 before 287. Support lower comes at 279 and 277.50 then 274.50 and 272.50 before 271.40. Pause in Uptrend.
SPY Weekly, $SPY
Heading into the last week of the 1st Quarter, equity markets have hit a speed bump. Elsewhere look for Gold to resume its uptrend while Crude Oil continues higher. The US Dollar Index despite all the noise remains in a broad consolidation while US Treasuries are breaking higher. The Shanghai Composite continues in the uptrend while Emerging Markets fall back into consolidation.
Volatility looks to remain low but building putting some pressure on the equity index ETF’s SPY, IWM and QQQ. Their charts are showing some divergence with the IWM pulling back in a short term trend reversal while the SPY holds and consolidates and the QQQ continues to higher highs. Use this information as you prepare for the coming week and trad’em well.
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