Saturday, May 30, 2009

ETF Rewind - Week 22 (05/29/09)

(Click Image to Enlarge/ Glossary)

It was another choppy but positive week for equities with the S&P500 (SPY) gaining an impressive +3.9% during the holiday-shortened week. This move put the index well above its simple 10-month moving average for the first time in over a year (although it remains just slightly below its 200-day).

In fact, gains were posted across all asset classes, with only the US Dollar showing mild weakness (UUP -0.8%). Note, however, how the reflation trade has nearly all commodities and correlated emerging market ETFs, such as DBC and EEM, looking very short-term overbought under the Price Index columns.

Week Twenty-Three of 2009 features another busy earnings and economic calendar, including the important Friday Jobs report:

Volume was very light during most of May, and it is easy to imagine a scenario where institutional money now begins to reenter equities after price having consolidated through time alongside all of the major indices having moved above -- or nearly above -- that magic 200-day line in the sand.

However, that is merely the technician's perspective. Last week's sector leadership was less than inspiring, equities are slightly short-term overbought, the economy remains off-track, and bonds could start competing with equities at current (rising) rate levels. The light volume contributed without a doubt, but it is really no wonder we witnessed such repeated sharp, fast breaks last week given these vastly opposed perspectives! Enjoy Your Weekend!

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2 comments:

ANNE-MARIE said...

Love the new color and chart format ...much easier to read, more more aesthetically pleasing

Jeff Pietsch CFA said...

I have clarified the titling of price versus the 10-month moving averages.