Market resignations

March 14, 2016 10:46 AM

As has been the case recently, media attention is concentrated on the current round of primaries.

However, the markets have resigned themselves to relegate their attention to basic fundamentals and of course, technicals. On the fundamental side crude oil continues its rally and dragging riskier assets such as equities and precious metals higher.

We remain cautious on all segments and urge investors to apply conservative analysis to their portfolios whether in equities or debt. Now for some actual information.


Interest rates

Treasury prices sold off on Friday as higher crude prices prompted buying in riskier assets such as equities and gold. The yield on the 30-year bond was up 5 basis points on the day 4.6 since last week to 2.749%. The March 30 year bond closed at 162 14/32nds, down 1 and 9/32nds. The "blame" can be squarely placed on improved crude oil prices. We continue to prefer the sidelines in treasuries but with a cautious eye towards crude oil prices.


Stock indices

The Dow Jones Industrial average closed at 17,213.31, up 218.18 points or 1.3% and for the week managed a gain of 1.1%. The S&P 500 closed at 2,022.19, up 32.62 points or 1.6% and also gained 1.1% for the week. The banking sector of the Standard & Poors was up 2.7% and the energy sector gained 2.2% thanks to the crude oil gains. The tech heavy Nasdaq Composite was up 86.31 points or 1.9% to 4,748.47 and for the week gained 0.7%.

Part of the gains was attributed to the price gains in crude oil but also due to the European Central Bank President Mario Draghi delivering a greater than expected stimulus plan on Thursday. With the further cut in interest rates highly unlikely global markets came under pressure. We prefer the sidelines for now. This coming Tuesday the Federal Reserve will convene its two day Federal Open Market Committee. The possibility of any inclination to raise rates is extremely low. We prefer the sidelines.

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About the Author

John has over 40 years experience at major U.S. Brokerage firms as Manager and Director of various International Divisions and is the founder of his own trading and brokerage firms. Over the years John has gained a wealth of knowledge and experience in all aspects of investments and trading. He was also a floor trader at the Commodity Exchange in New York. He formed Acuvest in 1999 and can be reached at futures@acuvest.com.