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Global Macro: The Week in Review

Stocks in this article: SPY XLE XLY

NEW YORK ( TheStreet) -- This week was more active than most, both within financial markets and in the outside political realm. In the mix were the Syrian conflict, revised GDP numbers and the fact that it is the final week in August as well as a quickly approaching September Federal Reserve meeting.

Markets used the final month of summer to push riskier markets lower, such as equities, as lower volumes meant bullish participants could not put up as much of a fight.

The SPDR S&P 500 (SPY) chart shows U.S. equity indexes continued their corrections lower this week as civil conflict in Syria and the United States' reaction to it topped the news. Western intervention in the small country of Syria could put the former at odds with the likes of Russia and China pushed commodities higher and equities lower.

The S&P 500 is in a well-defined upward sloping channel but within that the prices are moving toward the channel's lows. As we remain in a state of uncertainty surrounding U.S. monetary policy and a resolution to the conflict in Syria, equities should continue to drift lower.

The next chart is a relative strength measure of Energy Select Sector SPDR (XLE) over SPDR S&P 500. The energy sector got a huge boost this week from increasing oil prices.

Brent crude oil prices spiked higher as fear of potential supply disruptions due to the Syria conflict mounted.

The energy sector had been an extreme laggard for many months as fears of global growth and higher U.S. interest rates kept the commodity sector suppressed.

Similarly, the fear over Syria incited investors to buy U.S. Treasury bonds pushing yields lower and allowing commodities to push higher.

The spike higher could just be a reactionary move to geopolitical conflict, however, not completely justified by fundamentals. If this is the case, then expect energy and interests to correct back to their previous trend as the premium for political tension that is priced in gradually diminishes.

The last chart is a relative strength measure of Consumer Discretionary Select Sector SPDR (XLY) over SPDR S&P 500. The consumer discretionary sector has been weak over the past few months as interest rates and fears over economic growth have pushed the pair into a down trending channel.

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