Friday, July 30, 2010

From the Charts: Macro Week in Review/Preview 7/30/2010

We entered the week with Gold looking weaker and oil looking stronger. The dollar index seemed to be in limbo and equity Index ETF's seem to be poised to move higher with support of a VIX looking to move lower. Gold and Equity index ETF's moved as expected Monday and early Tuesday but then reversed course. Oil declared itself to be range bound and the dollar broke lower later in the week, taking bond yields lower. I am adding a new indicator this week, the iShares Barclays 20+ Yr Treasury Bond Fund, Ticker: TLT, as a proxy for the bond market. Let's look at the details:

Gold Daily

Gold Weekly

Gold had fallen out of the upward channel on the weekly chart last week and lost the supp of the 20wk SMA at 1190 on Monday. This allowed it to fall to the 1162-1164 support area from April. After a bounce it is attempting to retake the 100SMA and the 20WK SMA with a hammer on the weekly. The monthly chart however is adding to the resist at 1180. Above that another run at 1213 and higher can take place.

West Texas Intermediate Crude Daily

West Texas Intermediate Crude Weekly

Oil has been in a range between 76 and 82 for several weeks now, the game has been to figure out if it will be above or below the 100SMA in that range. It took a short trip above and has been hovering around the 100/200 SMA area. The weekly chart shows just how tightly bound that range is in the broader context. I am not expecting any change from this in the coming week.

US Dollar Index Daily

US Dollar Index Weekly

US Dollar Index Monthly

The US Dollar Index has been in a down trend since the beginning of June. Despite what looked like a pause in the daily chart this week the weekly shows continued downside which appeared in the daily later in the week. 80 - 80.70 looks to be a support area. I have added the monthly chart here to show just how ugly it could get below80 with support at 77.50 then 75, both corroborated on the weekly and daily charts.

iShares Barclays 20+ Yr Treasury Bond Fund Daily

iShares Barclays 20+ Yr Treasury Bond Fund Weekly

Treasury Bond yields have been a recent lows lately with prices near all time high levels and have been ranging lately. This is easily seen in the weekly chart with the range being 98-102 on the TLT. I expect this range to continue next week.

VIX Daily

VIX Weekly

The daily chart of VIX shows a continued elevated level and reduced range with 23.50 acting as support. The weekly shows more clearly that there is a descending triangle formed and it is near its conclusion. There is support below around 22 on a breakdown and 26 appears to be resistance above. Expect it to remain elevated in the coming week.

SPY Monthly

SPY Weekly

SPY Daily

Today was a big day as there were many reasons (price levels) to be fearful coming in. Going backward on the SPY the monthly chart shows a clear reversal of the downtrend with a bullish engulfing candle and above the 108.09 Fibonacci level. The weekly shows a doji but very close to last weeks high and above the 50 week SMA and finally the daily tested and held the 109.15 support area from the monthly chart today. It avoided virtually every potential pitfall today and looks to go higher now. 112 to 112.5 is resistance.

IWM Daily

IWM Weekly

IWM Monthly

The Russell 2000 ETF daily chart shows a bottom was found at the 50/200 day SMA cross near 63.79. From a touch there Friday it rallied to resistance at 65. The weekly looks a bit less bullish with a doji just above the 200week SMA at 65, but could be just resting. Moving to the monthly chart, IWM shows an inside candle and a range of 58.07 to 65. If it can hold above 65 then it will act as support for a run to 66.70 then 67.50 and 70. Failure sees support at 63.79 then 63 before 60. Based on SPY I expect it will hold and move higher.

QQQQ Daily

QQQQ Weekly

QQQQ Monthly

Finally the Q's look very similar to the IWM. The daily shows it bounced off support of the 200 SMA and stalled at the 45.75 resistance area. The weekly shows a doji right at a resistance/support line, but the monthly is slightly more bullish as it closed above the previous month's real body. Less indecision here, a short term positive next week with 46.70 as resistance.

So next week looks to bring stronger prices for Gold and Oil. The US Dollar Index seems to be headed to the woodshed for a further beating and US Treasury Bonds may drift to the top of their range. Less volatility in the volatility index and a weaker dollar should make it easier for stocks to rise from what looks like a minor bias to the upside for IWM to a bullish indication for SPY. Good luck next week!

No comments:

Post a Comment