Views From The Hill

View From The Hill: May-19-2015

Commentary

Equities: The SP-500 and DJ-30 Industrials made new highs once again. Unfortunately, if you are a disciple of Dow Theory, the Transports closed down and are headed in the opposite direction while Utility stocks were up but continue to trade in a downtrend. The Nasdaq-100 finished in positive territory and looks ready to test its most recent high . The Russell-2000, which has been an underperformer, is gaining momentum in its recently reestablished uptrend.

Volatility: The VIX continues to remain trapped in its bearish channel, but also has price support at its current levels.

Bonds: The 10-Year and 30-Year Treasuries closed in negative territory with their bearish channels intact.

Currencies: The big news was the U.S. Dollar Index which initiated a new uptrend. Look for it to test its 22 and 55 day moving averages and if successful, there is a high probability it will also retest its recent 12-month high. Price action in the Euro FX was the mirror opposite of the dollar today. The Yen, which has been confined to a congested trading range over the last several weeks, finally yielded to the Almighty (dollar).

Commodities: Of course a strong dollar is not without consequences and this left Gold and Crude Oil vulnerable to some rather sharp and bearish price reversals today.

Real Estate: The Dow Jones Real Estate Index was relatively unchanged while the Home Builder’s Index increased sharply on the news of today’s better than expected Housing report.

 

ETF Capital Markets Performance Summary
daily-mkt-summary_5-19-2015

 

Market Moving Events

Bullish

  • Central Banks / Europe: ECB officials announced plans to increase the size of QE bond purchases during seasonally slower months of May and June.
  • Real Estate / USA: Housing Starts for April-2015 were extremely strong @ 1.135mm starts vs. consensus @ 1.029mm and prior revised @ 0.944mm. Permits also grew sharply to 1.143mm vs. consensus @ 1.070mm and prior revised @ 1.038mm.
  • Earnings: Home Depot’s quarterly results gave further confirmation to a strong residential real estate market as it reported revenue and earnings above Wall Street’s expectations. Revenues were $20.89bn vs. prior @ $19.69bn while earnings per share came in @ $1.21 vs. last year’s $1.00.

Bearish

  • Inflation / UK: Consumer prices slid into negative territory for the first time at an annualized rate of -0.1%. Producer prices were also weaker than anticipated to reflect an annualized deflation rate @ -12.8%.
  • Investor Sentiment / Germany: The ZEW investor confidence index took a plummeted from 53.3 in April to 41.9 in May, mainly due to Germany’s weaker than expected Q1 GDP @ +0.3%

Neutral

  • N/A

 

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