Another solid yet unspectacular week for the markets. While no one seems to be participating, the S&P 500 bounced off its trendline to reach levels it hasn’t seen since July 2011. The index, though, seems poised to correct slightly. The relative strength index is very close to the 70 level, which tends to signal overbought conditions. The index is also at the upper range of the bollinger bands, while market sentiment is high. Those metrics combined lead me to believe in a temporary hiccup in the very short term.

The S&P 500 (Long-Term)

The VIX index, which tends to move inversely to the markets, is approaching the lows reached last July. It is right at support, and seems poised for a comeback. The “fear” index is calculated based on the implied volatility of of S&P 500 index options, where a high value corresponds to a more volatile market and therefore more costly options.

The US Dollar hit long-term resistance at the 82 level.  We might see further weakening as the Euro situation is being resolved.

The Euro bounced off long-term support and put up a solid gain for the week. A bounceback was expected, as bond auctions in Europe have gone very well in the last couple of weeks.

The Goldman Sachs Commodity Index is under both the 50 and 200 week moving averages. If the dollar continues to weaken, we might see a run-up, but with a suspect global economic outlook, and heavy resistance above the index, it would take a lot of money-printing and/or aggregate demand to push it through its downward trendline.

Oil seems to be on the cusp in the long-term. It is right at support, so a bounceback should be in order.

Gold is looking a lot better of late. It bounced off its 50 week MA beautifully, but is poised to hit long-term resistance. I would be a seller at the 16.50-17  range.

Europe as a whole looks to have made a bottom. Breaking through the 50-day MA and staying comfortably above it is a very good sign. The index might be due for a pullback in the very short-term, though.

 

Alhambra Investment Partners and/or its clients have positions in: GSG, IAU