Dollar Could Derail Bounce in Oil and Commodities
The intermarket picture is getting interesting with some big moves last week. First, stocks and oil have been moving higher since April 19th. The US Oil Fund (USO) is up almost 9%, while the S&P 500 ETF (SPY) is up just over 5%. Strength in these two helped the Copper ETF (JJC) rebound from oversold conditions. Even the Gold SPDR (GLD) got a nice bounce the last three weeks. Money moved out of Treasuries as the 20+ Year T-Bond ETF (TLT) and the 7-10 year T-Bond ETF (IEF) fell. The Dollar represents the twist in this story because the US Dollar Fund (UUP) surged last week and broke short-term resistance. Money is moving into the Dollar as both the Euro Currency Trust (FXE) and Yen ETF (FXY) fell. The Yen has been in a free fall since, while the Euro broke down just last week. Continued strength in the Dollar could come back to haunt commodities, especially if the stock market takes a breather. It is a big week on the economic front with Retail Sales kicking things off on Monday at 8:30AM. Retail sales drive some 2/3 of GDP and this report could set the tone for the week.
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Key Reports and Events (all times Eastern):
Mon - May 13 - 08:30 - Retail Sales
Wed - May 15 - 07:00 - MBA Mortgage Index
Wed - May 15 - 08:30 - Producer Price Index (PPI)
Wed - May 15 - 08:30 - Empire Manufacturing
Wed - May 15 - 09:15 - Industrial Production
Wed - May 15 - 10:30 - Oil Inventories
Thu - May 16 - 08:30 - Jobless Claims
Thu - May 16 - 08:30 - Consumer Price Index (CPI)
Thu - May 16 - 08:30 - Housing Starts/Building Permits
Thu - May 16 - 10:00 - Philadelphia Fed
Thu - May 16 - 10:30 - Natural Gas Inventories
Fri - May 17 - 09:55 - Michigan Sentiment
Fri - May 17 - 10:00 - Leading Indicators
Charts of Interest: Tuesday and Thursday
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is
not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise).
We all need to think for ourselves when it comes to trading our own accounts. First, it is
the only way to really learn. Second, we are the only ones responsible for our decisions.
Think of these charts as food for further analysis. Before making a trade, it is important
to have a plan. Plan the trade and trade the plan. Among other things, this includes setting
a trigger level, a target area and a stop-loss level. It is also important to plan for three
possible price movements: advance, decline or sideways. Have a plan for all three scenarios
BEFORE making the trade. Consider possible holding times. And finally, look at overall market
conditions and sector/industry performance.
