Recap: Week Ending July 31, 2015
Equity markets finished the final week of July in the green with the Toronto Stock Exchange Composite Index, TSX, leading the way higher. Last week the TSX climbed almost 2% to finish the week off at 14,468.73. Equities in the US also saw a bid, however, nothing as strong as that seen in Canada. The S&P 500 was the strongest, closing the week higher by 1.16%. Both the Dow Jones Industrial Average and the NASDAQ 100 finished the week higher by 0.69%. The push higher last comes as the market rallied both Tuesday and Wednesday, pushing the Dow Jones out of multi-month lows. The move higher in equities comes as the US Dollar did little last week, with the US Dollar Index settling higher by 0.10%. With this being said, the slide in the price of COMEX gold continued. Gold has settled lower for the past six trading weeks. Friday gold settled the week down $3.40 or 0.31% at $1,095. The move lower in the price comes as the United States Federal Reserve continues to threaten to hike interest rates. A move higher in rates would slowly put the brakes on inflation, and as gold is a hedge against inflation, the value of the metal would decrease. Last week the Federal Reserve announced that they would keep interest rates unchanged at 0 – 0.25%. However, it must be noted that it appears that the Fed will increase rates before the end of the 2015 calendar year. Like gold, the price of NYMEX crude oil pushed lower on the week, settling Friday at $46.77, marking a weekly loss of $1.19 or 2.48%. The negative close last week in crude markets the seventh straight weekly loss for the energy product. Crude continues to fall as the supply/production of oil continues to rise with weakening and soft demand. It appears that the weak commodity complex has not had an impact on the TSX as the Canadian benchmark equity index closed higher last week. The push higher last week in the TSX was one of the largest the index has seen in months and marks a possible bottom. Since its peak in mid-April, the TSX has fallen roughly 10%. On the flip side, US Treasuries closed higher in price last week. Last week the 30 year US bond closed at 155.13, marking a weekly gain of $1.42 or 0.92%. The gain last week was the third straight weekly gain that the long bond has seen.
From at technical standpoint, US indexes remain in a horizontal range which they have established with the exception of the NASDAQ 100. In mid-July the NASDAQ was able to break through the upper levels of its horizontal channel; however, it appears that it is now seeking value lower and will return to its already established channel. It must be noted that last week the Dow found resistance at its 200-day simple moving average, and area which in the past has acted as strong resistance. With this being said, the S&P is sitting above its 50-day simple moving average, forming a slight divergence. The TSX continues to be on a slide lower, however, closed higher four out of the last five trading days. It must be noted that the TSX is sitting below both its 50 and 200-day simple moving averages, areas which will without a doubt act as resistance on the upside.