The party hats for Dow 20K were ready along with the Champaign but the major index was unable to breach the psychological level, coming just 0.37th of a point away. U.S. indices notched up another strong week with the S&P 500 index climbing 1.7%. The Nasdaq 100 was the big winner for the week, climbing nearly 3%, as technology shares led the broader markets higher. Yields edged lower following some disappointing economic data in the U.S. but this was not the case in Europe which allow the dollar to ease against most major currencies. Oil prices continued to grind higher, but continue to have a difficult time holding above the 54 handle.
Though the December U.S. jobs report was largely plain vanilla, it was good enough to support rising animal spirits. The surprise headliner of the report, however, was the 0.4% surge in earnings, which caught the markets' attention. The question is, was this a one-off gain, or is it a harbinger of a pick-up in wage and price pressures that will push the FOMC into a more aggressive rate hike path? Several Fed voters have already begun to incorporate some Trump stimulus into their projections and are expected to continue to voice that opinion as Republicans are itching to expeditiously move ahead with their pro-business agenda in 2017.
There will be more Fedspeak this week, with an appearance from Chair Yellen Thursday and several rounds of updates on the economic and policy outlooks. The Bank of Canada will release its Business Outlook Survey right out of the gate, likely leaning towards cautious optimism and anchored inflation expectations. Multiple rounds of inflation data in Asia will feature, while focus will remain zeroed in on China's FX reserve decline after rounds of PBoC intervention last week to prop up the defensive yuan. In Europe, there has been an uptick in inflation as well, partly on back of the rebound in energy prices, though this won't alter the ECB's QE path for now. It has, however, contributed to the global rebound in bond yields, which comes at an awkward time for policy makers looking to stimulate growth more aggressively.
EUR/USD[i] moved back through resistance testing the highs near 1.0650, before easing on Friday following the U.S. payroll report. Support is now seen near the December lows at 1.0325, resistance is seen near the January highs at 1.0650. Momentum remains negative as the MACD (moving average convergence divergence) index recently generated a sell signal. The index is printing in the red with a downward sloping trajectory which points to a lower exchange rate.
The GBP/USD[i] sterling whipsawed during the week climbing but then giving back all of its gains on Friday following the solid average hourly earnings report. Support on the currency pair is seen near the October lows at 1.1943. Resistance is seen near the December highs at 1.2775. Momentum remains neutral with the MACD (moving average convergence divergence) index printing near the zero index level with a flat trajectory which points to consolidation.
Gold prices[i] rallied throughout the week testing resistance near the 10-week moving average at 1,184, but unable to recapture that level. Support is seen near the December lows at 1,123 and then the July 2015 lows at 1,076. Momentum is negative as the MACD (moving average convergence divergence) index prints in the red with a downward sloping trajectory which points to lower prices for the yellow metal. The RSI is just above the oversold trigger level of 30, and is moving higher, which could foreshadow a correction if breached.
US Tech 100
The Nasdaq[i]climbed 2.95% hitting a fresh all-time high and closing in rarified air. Support is seen near the October lows at 4,647. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a buy signal. This occurs as the spread (the 12-week moving average minus the 26-week moving average) crosses above the 9-week moving average of the spread.
Apple shares rebounded an additional 1.8% rising for the 5th consecutive week, and breaking through resistance near 117.50, which is now seen as short term support. Resistance is seen near the 2015 highs near 130. Support is seen near the 50-week moving average at 104.25. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a buy signal. This occurs as the spread (the 12-week moving average minus the 26-week moving average) crosses above the 9-week moving average of the spread.
Facebook shares rebounded more than 7% bouncing off support is seen near the 50-week moving average near 118.25. Resistance is seen near the 2016 highs near 133. Additional support is seen near the June lows at 108.23. Momentum remains negative but the trajectory of the MACD is changing which is reflecting decelerating negative momentum.
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