This week, equities saw a powerful upside reversal consistently putting in both higher-highs and lows. The major U.S. indices all ended in the green for the week, with the NASDAQ 100 (QQQQ) leading with a gain of +5.4%. Non-dollar denominated assets performed less spectacularly, however, with the EAFE International index (EFA) nearly flat as the USD found footing on the possibility of overseas easing even as the Federal Reserve held key rates at 2.0% (Bloomberg - Euro Declines; RTTNews - Greenback Levels).
Helping fuel the upward move, crude oil once again fell hard to close the week near $115/BBL, over 20% off its recent highs (AFP - Oil Prices Slump). In fact, Liquid Commodities (DBE) fell back another -9.0% on the week. Sector-wise, Consumer Discretionaries (XLY) put in the strongest performance of +7.5%, while Small-Cap Value (PWY) stocks led the pack from a style-perspective at +4.2%. Meanwhile, Financials (XLF) took a relative breather with a gain of +1.4% on poor Fannie Mae results (AP - Fannie Mae Loses) and regulatory heat from Cuomo's auction-rate security investigations (AP - UBS Settles): impressive given the news.
Looking ahead to Week 33, while strong breadth and oscillator headroom suggests follow through early into the week, both the Technology and Small-Cap Growth indices may quickly become due a relative pullback. Otherwise, trading will be dominated by Price, Inventory and Retail Sales reports on Wednesday; CPI and Initial Claims on Thursday; and various production indices and the Michigan Sentiment report on Friday. The battle between Russia and Georgia may also play on commodities (Bloomberg - Russia Is Waging), while another 214 companies are scheduled to report earnings.
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