Weekly Investment Outlook: May 29, 2017

 

The technical indicators for the different indexes moved in the bullish territory during the week and internal breadth improved with the Advance/Decline line for the NYSE making a new high each day of the week, although the NYSE advance-decline for the common stocks was still shade below its previous high The new 52-week highs expanded on both the NYSE and NASDAQ was also positive for the markets.

I would not read too much into the movement in the indices this week as it may be a low volume week (due to holiday) and the volatility could be high or low depending upon the participation.

 

Source: stockcharts.com

 

The real GDP for the first quarter was revised higher to 1.2% (from the earlier estimate of 0.9%) after the consumer spending and business fixed investments were revised higher for the first quarter. The commerce department reported that consumer spending increased 0.4 percent in April 2017 and the March numbers were also revised higher as mentioned earlier. The important jobs data comes out this week along with the private employment numbers from ADP. The rate hike probabilities for the month of June 2017 moved a little higher, to 88.8% from about 83% a week ago. A strong jobs report would all but seal the rate hike for next month.

 

Source: stockcharts.com, Euro

 

The euro rally cooled off a bit after the Draghi (the President of ECB) comments about the need of expansive monetary stimulus to restore the inflation in euro zone. The US Dollar has now fallen below its 200 moving average and looks really oversold. The weak US dollar has helped some of the consumer staple stocks to rally. We may see the US Dollar rally into the mid of June if we have a strong jobs report coupled with increased chances of fed rate hike next month.

 

Source: stockcharts.com, US Dollar

 

This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Chintan Shukla, CFA and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. You cannot invest directly in any index and Past performance may not be indicative of future results. Investing involves risk and investors may incur a profit or a loss. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.’s most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies. The Euro Index ($XEU) tracks Euro-Dollar. The Advance-Decline line index is a technical analysis tool that represents the total difference between the number of advancing and declining security prices. Securities offered through Raymond James Financial Services, Inc., member FINRA / SIPC. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc. Goldfarb Financial is not a registered broker/dealer and is independent of Raymond James Financial Services, Inc.

 

  

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