Equities: Valuation concerns and the prospect of rising interest rates failed to adversely affect stock investors. Today’s positive jobless claims report was a major contributing factor as unemployment filings were near 15-year lows. The SP-500 (SPY) and Nasdaq-100 (QQQ) continue to trade in a consolidating or market neutral pattern, but their primary trends remain bullish as neither has violated any key suppport levels. The Russell-2000 (IWM) is finding support and its correction may be almost over.
Volatility: The VIX (VXX) is not dead, but is definitely weaker. For almost two weeks, it has held support, but needs to clear resistance at last week’s high to cause any real concern. I still think the market is at an inflection point as equities and volatility play a game of chicken with one another to see who blinks first.
Bonds: The bond market shrugged off Chairperson Yellen’s remarks concering low long term rates as the 10-year and 30-year treasuries advanced +0.22% and +1.01% respectively. Despite this, the short to intermediate trends for 20+ Year Treasuries (TLT) remains bearish.
Currencies: After declining to earlier levels of consistent price support extending from January 19th to February 23rd this year, the Dollar rebounded on news of today’s Jobless Claims. Should Friday’s employment report be equally robust or more so, then look for the US Dollar (UUP) to continue its advance. Remember, this is a seesaw game folks. If the dollar advances on strong economic data, then the Euro (FXE) will react inversely with a pull back. Normally the Yen (FXY) would as well, but it will probably continue to vacillate under uncertain economic policy and leadership.
Commodities: For every reaction, there is a reaction and today’s dollar gain was a pain in the you-know-what for crude oil traders. To be fair, some price correction in Oil (USO) was forthcoming as it had advanced more than $20 per barrel from its March 17, 2015 low of $42.41. Although Gold (GLD) and its outlook remains neutral to bearish, it may be finding some temporary support. Our DBC Powershares Commodity Index (DBC) really took it on the chin today and is vulnerable to a new bearish trend unless it can recoup some of today’s losses.
Real Estate: Both the Dow Jones Real Estate Index (IYR) and Home Construction Builders (ITB) have establishing support at previous levels of buyer interest. The jury is still out, but so far their prices appear to be firming this week.
ETF Capital Markets Performance Analysis
Market Moving Events
- Economy/USA: Consumer Credit for March-2015 rebounded sharpy to $20.5bn vs. consensus @ $15.9bn and prior revised @ $14.8bn. Meanwhile, the consumer debt to income ratio has risen slightly but remains under 9%.
- Economy/Germany: Manufacturing in March-2015 for Germany increased 0.9% vs. consensus @ 1.0% and prior @ -0.9%. Annually, it rose 1.9% vs. 1.6% estimates and -1.2% last year.
- Economy/France: Industrial Production for March 2015 declined -0.3% vs. consensus @ 0.2% for the month. However, the prior month’s report was revised upward to 0.5% vs. previous @ 0.0%. Annual results were even more impressive with readings @ 1.3% vs, consenus @ 1.2% and upward revisions of the previous month from 0.6% to 1.2%.
- Economy/USA: Jobless Claims released for the week of May-2nd-2015 were better than expected @ 265k vs. consensus @ 280k and slightly above last week’s number @ 262k. These levels are at 15-year lows and may reflect improving labor market conditions.
- Central Banks/Europe: The ECB increased its funding for Greece’s Emergency Liquidity Assistance by 2bn Euros to 78.9bn Euros.
- Positive Earnings: Alibaba (BABA), Priceline (PCLN), and Whole Foods (WFM)
- Economy/USA: The Challenger Job Cuts report for April-2015 rose to 61,582 vs. prior @ 36,594. Hat tip to the energy sector accounting for more than 1/3 of these layoffs.
- Economy/France: The trade deficit for March-2015 widened to -4.6bn Euro vs. previous month revised @ -3.6bn Euro and inital report @ -3.5bn Euro.
- Central Banks/US Fed Reserve: Chairperson Yellen forewarend that long term rates could jump once the Fed begins to raise interest rates.
- Analyst Ratings/China: Morgan Stanley lowered its investment opinion on Chinese stocks from “overweight” to “equalweight”, based upon weaker corporate profit levels.
Stay Hillbent for the Market Direction…