Bond & Equity Report for May 14

DATA RELEASES 05/13/10

  • 8:30 am US retail sales (0.2%)
  • 9:15 am US industrial prod (0.6%)
  • 9:55 am US consumer sentiment (73.8)
  • 10:00 am US Business inventories (0.4%)

DATA RESULTS 05/13/10

  • US Weekly Jobless Claims (444K/440 K)
  • US Import/Export Prices (1.2%/0.9%)
  • EIA Inventory (Nat Gas 94 BCF)
  • 1:00 Pm US 30 year Bond Auction (B/C 2.60/ Yield 4.49%)

US DEBT REVIEW AND OUTLOOK
US Treasuries rebounded from early losses on Thursday as profit taking in stocks and a renewed sense of dread regarding the global growth picture renewed the security bid for US Treasuries. The US debt complex hit its worst levels of the day, with Treasuries trading below the 120 handle, after the $12 billion auction of US 30 Years went off with a whimper rather than the roar that previous auctions this week had. The complex was unable to rebound to its highs of the session, suggesting that market participants may be looking to square up portfolio positions ahead of Friday’s retail sales data. Volume particularly toward the close was light in both Treasuries and equities. The short end of the yield curve was the greatest beneficiary in terms of percentage gains as uncertainty regarding the global growth picture took on a new direction as the notion of austerity programs choking out growth opportunities (score one for deflation?)

TECHNICALLY SPEAKING- Significant support continues to set up at 119-16, with a break and close below this level setting up a possible retracement to 118-23. Resistance remains in place at 121-10.

US EQUITIES REVIEW AND OUTLOOK
Stocks gave the ghost on Thursday after failing to breakout through resistance levels. This failure prompted market participants to take some exposure off in sectors that have led the rebound from Thursday’s trade meltdown. Technologies, financials and retail stocks took the brunt of the late day pullback as concerns regarding global growth resurfaced due to the perception of a “glass half empty” regarding the new austerity programs that euro zone (how much longer will this term be applicable?) are implementing will reduce the opportunity for future growth and development of programs that can create sustainable revenues and opportunities. Data on US weekly jobless claims came in higher than expected. This prompted a sense of limited upside in a number of equity sectors as well, supporting the profit taking action.

TECHNICALLY SPEAKING- Support and Resistance levels for the current trading range in June S&P futures remain in place at 1143.00 and 1173.50. The late day pullback suggests a possible downside initial test of 1150.00. Breakout levels on the upside of the contract remain at 1178.50 and 1183.00, while a break through 1143.00 should initially target 1133.50 and bring into play a retest of 1122.00.

US DEBT FUTURES OPEN HIGH LOW CLOSE CHANGE
US M0 (US 30 YRS) 120-08 121-04 119-26 120-17 +7/32nds
SP M0 (S&P 500) 1166.50 1171.70 1154.00 1156.80 -12.90

Prepared by Rich Roscelli & Paul Brittain. PLEASE VOICE YOUR MARKET OPINIONS, THOUGHTS, AND QUESTIONS. EMAIL TO RICH@BINVSTGRP.COM. Additional Information can be found at WWW.WHITEHALLVEGAS.COM.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Whitehall Investment Management, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

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