Recap: Week Ending June 26, 2015

June 26, 2015

Equity markets traded lower last week breaking the two-week win streak in stocks. The NASDAQ 100 was the weakest last week losing 0.65%. The Dow Jones was the best performing, however, still ran a loss on the week falling 0.38%. The activity seen in the markets last week is nothing out of the ordinary and has been occurring for the past few months. One thing to note about last week’s trade is that its range shrunk, signalling less volatility. From this, it appears that many are unsure in regards to the next move of the market and are sitting on the sidelines until then. Over the course of past six months, the average daily volume in the Dow Jones Industrial average is slowly decreasing. The decrease in volume is the direct result of narrow trading ranges with little to no direction. With the Dow’s RSI, or Relative Strength Index, sitting at 50, it appears that the market is neither overbought nor oversold. A reading below 30 is considered oversold where a reading above 70 is considered overbought. Even the CBOE Volatility Index, commonly referred to as the VIX or fear index, traded to its 2015 year lows last week, signalling that volatility in the markets is trading at a year low.

Like US equities, gold ended its two-week win streak closing lower last week. The precious metal fell $26.10 or 2.18% to settle Friday at $1,173.70. Similar to the Dow, the RSI on gold is sitting at 44, signalling that it really neither overbought nor oversold. The lack of action is bigger in crude where last week’s trading range was $1.92 making a new low ranges in recent memory. With this being said, crude did settle lower by $0.04 last week. As mentioned in previous editions, the market appears to have established some psychological level at the $60 mark. Ever since rallying off of the lows in mid-March, crude hasn’t been able to establish any upside activity above the $60 level. Like other traded products, the RSI on crude is sitting at 50, meaning it has the potential to move greatly in either direction.

Unlike its American counterparts, the Toronto Stock Exchange, or TSX, closed the week higher. The push up last week marks the end of the 4-week slide in the TSX. Last week the Canadian benchmark equity index closed higher by 154.97 points or 1.06%. Upside activity was limited last week as the index found resistance at its 50-week simple moving average. If the TSX can close higher next week, the selling pressure would have appeared to have ended. The recent move lower in the TSX allowed many buyers to enter the market that will then prop it up when a push higher occurs. With this being said, if a move lower does occur it will occur will conviction as those previous buyers will be scrambling to sell their losing position adding to the selling pressure.

If you thought that the markets couldn’t get any quieter you are most likely wrong. This upcoming week is a holiday in both Canada and the United States. Canada will celebrate Canada Day on Wednesday and, as a result, Canadian markets will be closed to mark the holiday. The United States will be celebrating Independence Day on Friday, meaning that all US exchanges will be closed Friday. Because of these holidays in two countries, markets are expected to be rather quiet and uneventful.

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