Financial Markets Summary
Tuesday, November 10, 2015
- After reaching recent highs on November 3, stock prices have been in a moderate correction. The indices have dropped to near term support levels. A further decline of 2-4% from Monday’s close remains a good possibility, whether or not a bounce occurs first. Either way, much higher prices are likely in the coming weeks.
- The possibility of a Federal Reserve interest rate hike is back on the table at the upcoming December meeting. Recent economic events, Friday’s strong payroll data and the massive move higher by the U.S. dollar last week are all pointing to a greater likelihood of an increase. Keep in mind, any increase will be small and might not be followed by another increase for a considerable time. Even so, the potential for an increase is quite positive for financial stocks, which rallied nicely last week and appear to be regaining the upside they had lost.
- The U.S. dollar exhibited strength last week forming the right side of an eight month base and trading higher at levels not seen since April of this year. A break out of the current large base could send the dollar on a multi-month rally to considerably higher levels.
- The strength of the dollar weighed negatively on the gold market with gold prices dropping below $1100 an ounce last week. Gold has retraced all of the rally or bounce from the July-August lows. Gold is in a short, intermediate and long term downtrend.
- Crude oil prices have also reacted badly to a stronger dollar dropping below $43 a barrel last week before closing above $44 on Friday. Yesterday, oil spent much of the day on either side of $44 a barrel. The short term trend is neutral, while the intermediate and long term trends are lower.
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.