Financial Markets Summary
Tuesday, March 24, 2015
- The U.S. dollar finally took a time-out from its rapid ascent of the past couple of weeks and has begun a consolidation of the advance. At this point it is in its second week of pullback, but it doesn’t look like much of a pullback will occur. It appears it has found support at the 20 day moving average line making for a drop of about 3% from the recent highs.
- On an intermediate term basis, the U.S. dollar is likely to continue its positive trend and challenge the January 2002 high, which is about 20% above current levels.
- The price of oil bounced during the past week. It appears the bounce was more a pause of the downtrend than a new rally getting underway.
- The long term (months to years) and intermediate (weeks to months) trends for the price of oil show no signs of changing their downwards direction.
- The yield on the ten year U.S. Treasury note has dropped sharply during the past two weeks. The yield hit a recent high at 2.259% on March 6, while recording a recent low yesterday at 1.909%. Once again the rising yield was turned back by resistance sending yields lower and dropping through support, making it likely that yields have farther to fall before finding an area to bounce from.
- Gold dropped down to the December lows last week, but moved sharply higher from there. Gold remains solidly in a long term and intermediate term downtrend.
- Weak agricultural prices, low oil prices and restrained employment costs are keeping a ceiling on any potential inflation concerns for the economy.
- Real estate remains attractive. Homebuilders, REIT’s and commercial real estate areas all seem to be at the beginning of another significant move higher. The iShares Dow Jones U.S. Home Construction Index Fund, which is representative of home builders, broke out of a one and a half year price base in early February and now appears to be starting an intermediate term to long term move higher. Other ETF’s representing different areas of the real estate market seem to be equally appealing. The rally from the 2009-2011 lows might have been just the first phase in a multi-year upwards cycle.
Sources: bankrate.com, bloomberg.com, briefing.com, Dow Jones News, Financial Times, finviz.com, Investor's Business Daily, marketwatch.com, seekingalpha.com, Thomson Reuters/First Call, U.S. Dept of Treasury, yahoo.com and individual company web sites and press releases.
Leonetti & Associates, LLC views or opinions are as of a certain date and subject to change without notice. The material contained herein is for informational purposes only and obtained from sources we consider reliable. We make no guarantee as to its accuracy or completeness. References to specific securities and industries/sectors should not be considered recommendations to buy or sell any security or advisory service. Past performance is not a guarantee of future results.