Recap: Week Ending July 5, 2013

July 6, 2013

New MBA trading courses at the HIDC

New Undergraduate trading courses at the GTF

Traders across North America were scheduled for a shortened trading week with national holidays in both Canada and the United States; however, the lack of time was made up with the amount of energy seen in markets. This week the United States started off with horizontal chop, as time past daily ranges increased, and once again US indexes pushed higher. All major US indexes, Dow Jones, S&P 500 and the NASDAQ closed at their weekly highs, proving this push higher may be the start of something much larger. Trading volumes on the week were light, however; this is expected as many traders sized down or took time off. This past week marks the start of summer trade, which is commonly associated with low range days. With the markets showing no signs of slowing down, these markets are expected to stay active for some time. The VIX – CBOE Volatility Index eased off from its high of just under 22 seen in prior weeks. With the VIX between 15 and 20, the markets are expected to continue to move with energy and conviction. This week the VIX closed just under 15 finding support between the 50 and 200 day moving averages. Meanwhile in Canada the TSX saw little action as equities slide sideways as gold continued its push lower. The TSX seems unclear on its next move as gold continues to fall, but US stocks continue to push higher. It is expected that the TSX will fall despite the strong bullish presence in the US due to the overwhelming make up of gold companies on the TSX.  Currently the TSX has found resistance just above 12,188 which marks a large gap from April 15 of this year. The next year for possible resistance would be 12,268.29 which marks the start of the top of the 19 June gap down.

In recent news, both the European Central Bank and Bank of England kept rates unchanged. Both Central Bank’s interest rates will remain at 0.5% until the next announcement. The ECB stated that rates will remain at their current level for some time. This gave investors around the world reassurance that the US may not hike rates as previously announced. Such news drove global markets higher both Thursday and Friday. If the Federal Reserve of the United States were to raise rates this fall it is expected that this could cause global markets to take a major adjustment to the downside. Many believe that a rate hike in the US is premature as many global economies are still recovering.

Both Canada and the US released unemployment figures late this week. In Canada, no change in the unemployment rate was seen, holding steady at 7.6%. With this being said, the Ivey Purchasing Mangers Index for the month of June missed expectations as well as the prior reading, coming in at 55.3. In the US, the unemployment rate did not tick, instead holding strong at 7.6%. Despite the lack of change in the rate, Nonfarm Payrolls came in at 195K which shows no change from the prior reading but beats expectations. This economic release is seen as bullish for the US economy, giving the possibility for prior GDP readings to be upgraded.

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