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.
Market Moving Events
- 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.
- 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%