Recap: Week Ending May 22, 2015
Equity markets finished the week mixed with the Dow Jones losing ground while the NASDAQ 100 caught a nice bid. The NASDAQ 100 moved higher by 0.73% last week; however, the Dow fell by 0.22%. Last Monday was a holiday in Canada; as a result the Toronto Stock Exchange, or TSX, was closed. Despite the holiday, the TSX was able to catch a steady bid, climbing 0.61% last week. It appears that the TSX has found support at its 200-day simple moving average. The moving average acted as solid support on two occasions and has since acted as a temporary floor for the index. With this being said, the TSX remains just over 200 points away from making multi years highs. On the flip side, the Dow Jones was able to print new all time highs last week before selling off slightly. It appears that this push to the upside in the Dow is an attempt to out of its tight trading range that it has been stuck in since March. A successful push higher through the Dow’s all-time highs will create an area off support for moves to the downside if and when they occur.
Once again, North American crude oil settled higher last week. The benchmark energy product closed the week up $0.03 or 0.05%. The move higher may be limited; however, it shows that buyers are still in control. Even though crude has moved up 45% since its lows in mid-March, the Relative Strength Index, or RSI, is only reading 51 on a daily time frame. A reading above 70 is considered overbought and below 30 oversold. A reading of 51 indicates that there is room for more upside activity before it is considered overbought. The MACD, or Moving Average Convergence Divergence Indicator, is bullish and does not show any signs of reversing signals. The attempted move higher in crude was without a doubt muted by a strong bid in the USD Index. The USD Index, which is a weighted average of the strength of the USD against other currencies moved higher last week, closing up Friday 2.93 points of 3.14%. In recent weeks, the USD and crude have had a negative correlation. Unlike crude, gold was unable to maintain a bid, closing the week down 1.44% or $17.60. The move lower in gold can be related to the push higher in the USD. From a technical viewpoint, like crude, the daily RSI for gold is sitting roughly flat at 49. Such a midrange reading shows that the precious metal could see significant downside before being considered oversold. So far for the 2015 year gold is roughly 5.5% off of its lows which it established in the middle of March
This week is a holiday week in the US with markets being closed Monday for Memorial Day. Because of the holiday, expect lighter trading volumes as well as narrower ranges as many will be on holidays. The US holiday will have effects on global markets as many exchanges around the world will see lighten trade Monday.