Recap: Week Ending December 26, 2014

December 27, 2014

Equities moved higher last week on a shortened holiday schedule. Markets in Canada were closed both Thursday and Friday for Christmas and Boxing day while US markets closed early Wednesday and were closed Thursday with an open as regular Friday. The holiday closures brought extremely light trading volume which resulted in little conviction in either direction and little volatility. With this being said, the Dow Jones Industrial Average was able to creep up over 1.5% on the week while the NASDAQ 100 was only able to gain 0.75% on the week. North of the border the Toronto Stock Exchange Composite, TSX, fared rather well closing the week up 1% to close slightly above its 50 day simple moving average. Currently, the TSX is about 3.5% away from recovering the losses seen from mid-November to December as the price of crude oil plunged. The TSX has become divergent against crude which has yet to recover really any gains and is still sitting at multi-year lows.

The lack of volume was accompanied by a quiet economic calendar with the most important data being released Tuesday. Tuesday saw the release of both the Canadian and US GDP. The Canadian GDP for the month of October came in at 0.3%, beating the expectations of 0.1%, however, failing to surpass the last reading of 0.4%. The reading caused a small bid to enter the market which allowed the TSX to close the day on session highs. GDP reading for the US, which is for the third quarter annualized, came in above the prior reading and expectation coming in at 5%. The prior reading was 4.6%, and the expected was 4.3%. Like the TSX, the Dow was able to catch a bid on the day as a result of the news; however, the amount of upside activity was limited. The lack of bid activity on the reading in both countries can be attributed to the slow holiday week.

This upcoming week is yet another holiday week as markets will be closed for New Years. A regular close at 4pm will occur for North American equities on Wednesday Dec 31 followed by a full market closure on Thursday Jan 1 to celebrate New Years. Like last week, markets are once again expected to drift higher on light volume as the economic calendar looks light again.

Best of in the New Year! May all your trades be profitable!

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