Recap: Week Ending May 2, 2014
Equity markets continued to show little conviction in either direction for almost the tenth weekin a row. Markets across the board closed higher; however, this comes after a lightened selloff in the previous week. The Dow Jones Industrial Average has beenstuck in a 450 point range for numerous weeks. This range borders the upper bounds of highs made at the end of 2013 year, these highs were also all time highs in the Dow. A similar range is seen in the S&P 500 where it seems the market has found the ideal spot. The NASDAQ 100 has not fallen into such a tight range as the tech heavy index experienced strong selling pressure during the month of March. In recent weeksdivergent activity was seen across major US indexes, which in turn led to little conviction moves in either direction. While other majors were experiencing higher levels, the NASDAQ 100 was remaining on offer and experiencing selling pressure. With this being said, it appears the bid is still present in both the Dow and S&P. As a bid slowly appears in the NASDAQ 100 it is expected that an insync push higher will be seen across the board in equity markets.
This was a busy week for economic news with the US Federal Reserve announcing their interest rate decision. No surprises wereexpected from the regular taper. As investors expected, tapering of the bond buying program known as Quantitative Easing came in at a reduction of $10Billion USD. It wasalsoannounced that the FED will stick with its low target Fed Funds rate of 0-0.25%. On Tuesday the Bank of Japan, BoJ, announced that they will keep interest rates targeted between 0-0.10%. No charge is expected from both countries in the upcoming announcement.
Friday saw the release of the US unemployment rate for the month of April. The figure came in smashing expectations and previous readings. The prior reading was 6.7% with surveyed expectations coming in at 6.6%. The actual figure came in well below expectations at 6.3%. This number came as a surprise to the economists, however, it appears that the market already had priced in the release as little reaction wasseen upon the announcement. When recent figures werereleased with the beat that was seen in the recent unemployment figure markets rallied hard, however, on the day Friday markets closed mixed with both the Dow and S&P closing lower on the day. The lack of buyers from the bullish number indicates that the market may be getting tired of what appears to be endless upside activity.
The Toronto Stock Exchange Composite Index, TSX, continues to push higher into new multi year years. On the last four trading days, the TSX closed up 230 points for a gain of 1.6%. The Canadian benchmark index has been on a roll this year and it so far up nearly 8.5% since January. As mentioned in previous articles the MACD indicator, which stands for, Moving Average Convergence-Divergence, slowed a bullish signal last week. The signal remains strong from the week ahead, however, investors must look towards the RSI indicator, Relative, Strength Index, as it is currently entering oversold territory.