It really not comparable. The weekly chart is throwing away important information because its too granular. Don't look for something that fits your idea of what the trends should be because you'll invariably find something that fits it.
It really doesn't. The weekly average is still directly affected by the spikes and the crashes. No data is "thrown out". The reason it looks fairly smooth and less spike is because that is what the average value actually really looks like.
As a rational investor, I don't assume I can actually predict the peak of a bubble or the bottom of a crash. Anyone who can do such can make arbitrarily as much money as they want so it's all irrelevant if you can. If you can't though, you will be playing based on the averages. A weekly average is perfectly valid if you aren't day-trading.