Gold Price Continues To Test Downside

New York (July 19)  Last week’s review of the macro market indicators suggested, heading into July Options Expiration week, that the equity markets still looked vulnerable short term in their longer term uptrends. Elsewhere looked for gold to continue to test the downside, while crude oil also turned lower. The US dollar index seemed ready to move higher in its consolidation, while US Treasuries were biased lower in their consolidation. The Shanghai Composite and Emerging Markets were both bouncing and need to be watched carefully to see if the moves were real. Volatility looked to remain in the elevated range of this low level, continuing to lessen the tail wind for the equity index ETF’s ARCA:SPY, ARCA:IWM and NASDAQ:QQQ. Their charts showed the IWM looking the best short term, as they all tried to hold and reverse higher, while the QQQ and IWM looked good longer term, as the SPY was weakest.

The week played out with gold continuing lower, while crude oil started flat, but then leaked lower late in the week. The US dollar found support and broke out of the range higher, while Treasuries also found support and bounced, but remained in the consolidation range. The Shanghai Composite absorbed the bounce on a small pullback and then moved higher, while Emerging Markets held in a tight range. Volatility moved sharply lower, touching a new 7 month low giving a strong tailwind to Equities. The Equity Index ETF’s all jumped on the week, with the SPY stalling at the prior high area in the mid 212’s, the IWM at the late June support before the move lower, and the QQQ taking charge, running to new 15 year highs.