View From The Hill: May-7-2015

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.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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