Financial Markets Summary
Tuesday, June 14, 2016
- The Federal Open Market Committee’s two day meeting concludes on Wednesday. No change in monetary policy is expected to be announced. However, just a few weeks ago, before some recent disappointing economic reports were released, there had been thoughts that an interest rate increase was possible at this meeting. Now the focus is on whether there will be an increase in interest rates or possibly two increases before year-end. Following the Federal Reserve’s statement Chairwoman Janet Yellen will hold a press conference.
- The stock market remains in its short term pullback and will be affected throughout the week by Friday’s quadruple witching expiration. This is when index futures, index options, stock futures and stock options all expire.
- Oil reached $51.67 a barrel last week reaching its highest level since July. Last week’s high set up a mild pullback that has dropped oil nearly 5% from the high. A further pullback towards $46 a barrel is possible for a 10% or so pullback. The short term trend is higher. The intermediate and long term downtrends remain in effect.
- A natural gas field in western Colorado (Mancos Shale) has had its reserve estimates increased by forty times making it the second largest natural gas field in the U.S only smaller than the Marcellus Shale found in the northeast. Estimates indicate that drilling won’t take place by companies until gas prices rise to well over $3.00 for one million British Thermal Units. Currently they are closer to $2.00. There are also infrastructure and delivery obstacles that will need to be solved.
- Gold hit a high of $1306 an ounce in early May and has been in a corrective situation since. A lot of support exits between $1240 and $1170 keeping gold propped close to the high. Gold closed yesterday slightly above $1286. The short term trend is higher for gold, while the intermediate and long term trend is lower.
- The U.S. dollar remains in a fifteen month base. At times it looked as if it would break through the top of the base, while more recently it has been looking more susceptible for a break through the bottom of the base.
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.