Weekly ETF Rewind: Economy Remains Off Track in Week 22

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It was another choppy but positive week for equities with the S&P500 (SPY) gaining an impressive +3.9% during the holiday-shortened week. This move put the index well above its simple 10-month moving average for the first time in nearly a year (although it remains just slightly below its 200-day).

In fact, gains were posted across all asset classes, with only the US Dollar showing mild weakness (UUP -0.8%). Note, however, how the reflation trade has nearly all commodities and correlated emerging market ETFs, such as DBC and EEM, looking very short-term overbought under the Price Index columns.

Week Twenty-Three of 2009 features another busy earnings and economic calendar, including the important Friday Jobs report:

• Yahoo! - U.S. Economic Calendar
• Yahoo! - U.S. Earnings Calendar

Volume was very light during most of May, and it is easy to imagine a scenario where institutional money now begins to reenter equities after price having consolidated through time alongside all of the major indices having moved above -- or nearly above -- that magic 200-day line in the sand.

However, that is merely the technician's perspective. Last week's sector leadership was less than inspiring, equities are slightly short-term overbought, the economy remains off-track, and bonds could start competing with equities at current (rising) rate levels. The light volume contributed without a doubt, but it is really no wonder we witnessed such repeated sharp, fast breaks last week given these vastly opposed perspectives!

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Comments

[adan:]

i'm long and short, uwm & twm, so a pull back'd be as beneficial as a rise...

constructively, i think it'd do the market good to pull back (not too much ;-) and either, scare people into helping the market base and consolidate, or allow others to jump in at a better price

opportunistically, a rising market'd let precious metals "relax" from their fear trade, again allowing better entry

sitting perfectly still'd let me eat, bathe, and do something else fun ;-)

May 31 04:57 PM