Friday, August 13, 2010

From the Charts: Macro Week in Review/Preview August 21, 2010

Coming into this week I expected continued stronger prices for Gold and the US Dollar Index, with US Treasury Bonds trying to join the party. Oil looked broken and headed on a path lower. And a slowly rising volatility index combined with that stronger dollar looked to continue to press stocks lower. The week started mainly as expected and finished as expected but was a bit uncertain in between. Let's look at the charts:

Gold Daily
Gold Weekly
Gold looked strong all week and finished Friday with a healthy pause. It tested the 1233 resistance, and is now resting for run at 1245, with support on the daily chart at 1220. The uptrend looks to continue. The weekly chart clearly shows the trend is higher and that 1260 is the next resistance level.

West Texas Intermediate Crude Daily

West Texas Intermediate Crude Weekly
Oil continued the bear flag after falling and started a new downward move on Friday. Although it nearly printed a hammer, it still looks weak, and ready to test 72 as support. There is resistance above at 75 and then 77.25. Turning to the weekly chart the picture gets uglier. Last week oil lost the 20, 50, and 200 week SMA's and it barely tested them before a continuation of the chart lower. Under 72 there is support at 71.19 then 67.78.

US Dollar Index Daily

US Dollar Index Weekly
The US Dollar Index finally cracked 83 on Friday and tested 50SMA, at 83.42. It looks good to take it out and head higher from there. Resistance stands at 83.72 and then 84.25, with support at 82. The weekly chart shows the start of a bull flag holding over support at 82.25.

iShares Barclays 20+ Yr Treasury Bond Fund Daily

iShares Barclays 20+ Yr Treasury Bond Fund Weekly
Bonds as measured by the TLT broke higher out of a tight range this week, clearly seen in the weekly chart. The daily chart shows the gap up and flag before a further run late in the week. Friday looked to be a rest day after the strong move this week. It looks good for more. 108 is the next resistance followed by 110. There is now support at 105 and 104 before the gap level of 102. The weekly adds that it is getting overbought but this is on a strong quick move up so it can stay that way for a while. It also shows resistance higher at 110.

VIX Daily

VIX Weekly
The Volatility Index has broadly been in a range between 22-28 for the last 6 weeks. It started the week falling to test the 200 day SMA and held to move higher and is now testing support of 50/100 day SMA cross. But in a range. If it holds then 28 is resistance higher and below 23.36 is support. The weekly chart is a bit more bullish with a test of the 28 resistance with 30.25 then 32.68 as resistance higher.

SPY 60 minute

SPY Daily

SPY Weekly
The SPY is trending lower and looks to continue. Despite the bullish doji above support at 107.10 on the daily chart the weekly printed a more bearish looking long legged doji, which takes precedence. This uncertainty is easier to understand when looking at the hourly chart and seeing all the support and resistance points between 106 and 110. Both scenarios could happen if there is a small up move to the tightening wedge on the daily before a further fall. Not a prediction, just saying. If the SPY does get through and hold below 107.10, then support is at 106 followed by 104.75. Resistance is at 109.05, then 109.66.

IWM Daily

IWM Weekly
IWM printed a bullish hammer candle Friday which may stall the fall. Like the SPY though, the weekly chart for IWM shows a long shadow meaning that it ended the week on weakness. Recall the weekly weakness takes precedence over the daily chart. 61 is support with 60.03-60.25 below that and resistance is at 61.60 then 63.00-.60.

QQQQ Daily

QQQQ Weekly
The Q's look similar to the SPY and IWM. A near hammer on Friday bodes bullish in the very short term with resistance at 45 and then 45.40. But the long shadow on the weekly chart again illustrates that the week ended on a downward move, in this case right at the 50 week SMA. Support comes at 44.50 then 44 from the daily chart and then lower at 42.43-.78 from the weekly chart.

So next week looks good for more upside on both the daily and weekly scale for Gold, the US Dollar Index and Treasury Bonds. The Equity Index ETF's could see a positive move in the very short term but the weekly charts point lower. Uncertain how to react to that, the VIX is still rangebound. Trade well this week!

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