The release of housing data and quarterly results from major retailers will likely put a double focus on consumer-driven stocks in the coming week as debt concerns loom. On Monday, the National Association of Home Builders is set to release its housing market index, followed on Tuesday with April housing starts data from the Commerce Department. On Thursday, the National Association of Realtors will report existing home sales data for April. The Dow lost ground in the last week as investors fretted over the economic recovery.
Next week will also see the United States reaching its $14.294 trillion debt ceiling on Monday, based on Treasury estimates, prompting the department to begin measures to keep payments current until August. Good or less bad news, in the housing market would be a welcome sign to equity markets. Both the Dow Jones Industrial Average and the S&P 500 Index closed down for the week, with the Nasdaq Composite Index showing a marginal gain. The Dow finished down 0.3% to close at 12,595.70 on the week, the S&P 500 fell 0.2% to 1337.77, and the Nasdaq rose less than 0.1% to close at 2828.47.
Crude-oil futures lost ground on Monday, as the arrest of the head of the International Monetary Fund added to uncertainty about the progress of resolving European sovereign-debt woes. Light, sweet crude-oil futures for June delivery declined 85 cents to $98.80 a barrel in Nymex electronic trading on Monday, unable to extend a gain made late Friday in regular New York trading hours. Given the lack of fresh catalysts in the market, sentiment has veered towards focusing on external factors, such as the macro economy, the dollar and margin requirements.
Today’s Important Economic Announcements (GMT)
9:00 AM EUR CPI y/y
12:30 PM CAD Manufacturing Sales m/m
12:30 PM USD Empire State Manufacturing Index
1:00 PM USD Fed Chairman Bernanke Speaks
4:45 PM CAD BOC Gov Carney Speaks
GBP/USD
Cable rebounded initially from Asian morning low of 1.6240 to 1.6308 in Europe but sterling then fell broadly versus the US dollar, yen and euro. Sterling was under pressure after the Institute for Fiscal Studies said U.K. living standards would fall as inflation outstripped income growth and government spending cuts crimped welfare payments. The pound later tanked in tandem with euro in NY trading and pierced through Thursday’s low of 1.6235 to 1.6147 before staging a minor recovery in New York afternoon. On the daily the pound is in measured moves short and hit its 23.6% target at 1.61581. Good to wait to see if pound bounces before measuring next short setup.
Stop Loss: 1.6158
Take Profit: 1.6378
Silver
Silver’s destiny with its slow moving average appears to be sealed this week as a brief bounce earlier in the week failed at the fast moving average. From peak to trough so far this correction has run about 35%, which is still less than the 37% correction silver underwent from its parabolic peak in 2006. And the rally in 2005-2006 for silver was dwarfed by this recent run. In 2005-2006 silver went from $6.64 to $15.21 for a 129% gain. The 2010-2011 rally took silver from $17.22 to $49.75 for a 189% gain. So if this recent silver parabola follows the “higher they rise, harder they fall” rule then we should see a bigger correction than 37% peak to trough. In other words, we are expecting this precious metal to weaken further throughout the week. Any rise towards $40 should trigger a short position.
Stop Loss: 36.41
Take Profit: 32.51
JPY/USD
The yen strengthened against most of its major counterparts, boosted by speculation that Tokyo Electric Power Co. was repatriating overseas funds to pay for damages and compensation in the wake of this year’s nuclear power-plant disaster. The EUR/JPY, AUD/JPY, and GBP/JPY fell sharply from 115.47 to 113.51, from 86.47 to 84.90 and from 131.59 to 130.30 respectively in New York midday after the release of U.S. CPI data and Standard & Poor’s report in New York morning. Today, we are expecting Japan domestic CGPI and later this week look out for GDP figures as well as BOJ rate decision. In any case, the weak fundamentals imply short positions are encouraged.
Stop Loss: 81.26
Take Profit: 80.49
Published by www.SolidityBrokers.com
