Stocks rose gradually back by the positive economic data. Even though January retail sales were slightly disappointed, other data continued to indicate healthy recovery signs: initial claims surprisingly fell to multi-year lows (348k vs. 368k est.), meantime the home builders' index (29 vs. 26 est.) and housing starts (699k vs. 688k est.) both reached new high after the financial crisis. On the fixed income front, bonds faced pressure toward the recent FOMC minutes as less members were favored toward QE3. The short-term rates rallied the most and the 10-year finished above 2% for the week resulted from optimistic economy and lower chance of more QE. Market will continue to focus on more housing data next week after the holiday.
Technical Highlights:
• Equities rally led by positive economic data; FOMC place pressure on bonds for another round of QE.
• Trend continued to strengthen; the Golden Cross arrived to the NYSE index.
• Cautious on equity as energy finished with the most gains for the week, which may be a signal of a stock market top.
• Historical returns appear bullish bias toward the middle sectors (energy and materials), and bearish on the leading group (technology and financials) for equities forward looking.
• Treasury rates rally led by the Fed; the 2yr is approaching to its 200days moving average, which may become a resistance.
http://plus.alpbeta.com/report/201207.pdf
Technical Highlights:
• Equities rally led by positive economic data; FOMC place pressure on bonds for another round of QE.
• Trend continued to strengthen; the Golden Cross arrived to the NYSE index.
• Cautious on equity as energy finished with the most gains for the week, which may be a signal of a stock market top.
• Historical returns appear bullish bias toward the middle sectors (energy and materials), and bearish on the leading group (technology and financials) for equities forward looking.
• Treasury rates rally led by the Fed; the 2yr is approaching to its 200days moving average, which may become a resistance.
http://plus.alpbeta.com/report/201207.pdf
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