Saturday, 3 January 2015

Weekly Update - Week Ended 2 January 2015

Market Summary and Technical 
  • Looks like breakout in S&P 500 and Russell 2000 might have failed
    • Divergences apparent
  • Gold again  shows strength despite dollar strength – in Friday’s session, UUP up 0.96% and GLD up 0.44%
  • Euro down significantly on Friday as Draghi  hints that QE is coming soon

[Market Summary]

[2014 Performance]

[Trend Watch]

[Selected Charts]

[Market Breadth]

Readings and Trends
  • 2014 Trends (FT)
    • Winners include the US dollar, long dated US Treasuries, S&P 500, European bonds, Shanghai Composite
    • Major losers include the energy complex and Russia
  • China PMI slips in December
    • Official PMI - slipped to 50.1 last month from November's 50.3
    • HSBC PMI - 49.6 in December from 50 in November
  • Restrictions being eased in Chinese housing market (Forbes)
  • US Manufacturing PMI - fell to 55.5 in December from 58.7 in November (CNA)

Investment Implications and Opportunities 
  • Pace of US dollar rise is unsustainable
    • EU QE could be a case of sell the rumour,  buy on the news ie official launch of QE in EU could be turning point for dollar
    • Pace of growth in US unsustainable – Manufacturing PMI fell in December
  • Breakout in US equities seems to have failed – to maintain hedges
  • 2015 could be the turning point for metals and gold (see my recent article)
    • In particular – gold on Friday showed remarkable resilience despite US dollar being up significantly

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