View From The Hill: May-20-2015

Posted on Posted in Views From The Hill

Commentary

Equities: Stocks continue to maintain their bullish uptrends. The SP-500 (@ 2125.85 / -1.98 / -0.09%) made its third consecutive all-time high, but closed lower than yesterday. The DJ-30 Industrials (@18,285.40 / -26.99 / -0.15%) were off slightly, while the Nasdaq-100 (@ 4,505.30 / +1.58 / +0.04%) and Russell-2000 (@ 1,257.74 / +2.08 / +0.17%) remained barely unchanged on the positive side.

Volatility: It is not so common to see both the VIX (@ 12.88 / +0.03 / +0.23%) up in conjunction with stocks, but such is the case when the market is confused or uncertain.

Treasury Bonds: Bonds caught a dead-cat bounce as treasury interest rates pulled back on FOMC minutes that suggested the Fed may defer on raising interest rates in the near term future. 10-Yr rates (@ 22.51 /-0.11 / -0.49%) and 30-Yr rates (@ 30.53 / +0.15 / +0.49) gave a split decision as they moved in opposite directions.

Currencies: The U.S. Dollar Index (@ 95.509 / +0.146 / +0.15%) continued its bullish charge by running over its 22-day moving average. The Euro FX (@ 1.11200 / -0.00390 / -0.35%) did just the opposite by falling below its own 22-day moving average. The Yen FX (@ 0.82550 / -0.00290 / -0.35%) is no longer consolidating, but instead has broken its support to initiate a new downtrend.

Commodities: June-2015 Gold (@ 1207.70 / +2.00 / +0.17%) was unable to recover much of the previous day’s losses, but it did display remarkable relative strength by recovering from early morning selling. This tells me the bugs are not willing to give up so easily at these low prices. July-2105 Crude Oil (@ 58.76 / +0.77 / +1.33%) was not able to make serious inroads into yesterday’s trading rage either as it closed just below its 22-day moving average. Although the trend is down and the fundamentals support lower prices due to oversupply and rampant production, we could very well see a retracement to $60 before it tests support @ $56.

Real Estate: The Dow Jones Real Estate Index (@ 298.46 / -0.68 / -0.23%) took another rest today as it continues to consolidate last week’s gains. The Home Construction Index (@ 559.34 / +2.67 / +0.48%) is getting to be a bit overextended, which makes momentum chases entering new positions vulnerable to a pullback. Just saying…

ETF Capital Markets Performance Summary

daily-mkt-summary_5-20-2015
May-20-2015

 

Market Moving Events

Bullish

  • N/A

Bearish

  • Residential Real Estate / USA: Mortgage Applications for the week of May-15-2015 contracted. The composite index was @ -1.5% vs. last week’s -3.5%. Purchase applications were -4.0% vs. prior @ -0.2% and Refinancings were @ 3.0% vs. prior @ -6.0%.

Neutral

  • Central Banks / USA: The FOMC Minutes for May-5-2015 indicated an inclination to defer on raising rates next June, but using it as a tool to mitigate the risk of inflation still remains on an option in its playbook. The market did not know what to make of it as reflected in price action of all of the major asset classes.
  • Energy / USA: The weekly EIA Petroleum Status report indicated a much larger drawdown than expected by analysts. Crude Oil inventories were down -2.7mm barrels vs. prior @ -2.2mm. However, with production levels higher than existing demand, the report did not not sway the market.
  • Inflation / Germany: Deflation concerns are being alleviated as Germany’s PPI for April-2015 registered its third consecutive monthly increase. With that said, producer prices rose 0.1% vs. consensus @ 0.2% and prior @ 0.1%. Year-over-year, prices increased -1.5% vs. consensus @ -1.4% and prior @ -1.7%, a slight improvement.

Signing off at Hillbent…

 

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