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  • Proprietary Trading Weekly Market Recap For Friday, Nov. 1, 2013 0 comments
    Nov 2, 2013 9:46 AM | about stocks: FB, DIA, AAPL

    Stocks Notch Up Solid October

    October was a strong month for stocks which ended the week on a positive although gains were muted. The S&P 500 index notched up a 4.46% gain in October which is one of the best on record. Historically October has produced negative returns for investors which makes this year all the more special.

    There were a number of high profile companies releasing earnings during the past week which were stronger than expected. Facebook (NASDAQ:FB) released earning on Wednesday evening that knocked the cover off the ball. The stock price initially soared but comments from the CFO that discussed the flat trajectory of gaining new young users pushed the stock back toward unchanged. Apple (NASDAQ:AAPL) released earnings earlier in the week which were also better than expected, but the stock price received little positive price action.

    Recent European economic data including very soft inflation data has reduced yields in the EU and fanned speculation that the ECB could cut interest rates when they meet next week. The yield differential has moved in favor of the greenback putting pressure on the Euro which has declined nearly 3 big figures in the last two proprietary trading sessions.

    The ECB is scheduled to meet next week on Thursday and already there are calls for an EU rate cut. The very low levels of inflation which were released during this week have created a deflationary environment which could handle additional stimulus. Although a cut in the refinance rate is unlikely the ECB will likely generate a dovish statement during their press conference which could ease some of the tension on the Euro. The ECB might also consider eliminating the penalty to banks for using the LTRO.

    The FOMC met this week and eliminated a line from there statement which focused on the fiscal brinkmanship which was taking place during their last meeting. Data in the US has been relatively weak but strong enough to attract capital given the recent softness in the EU data.

    Manufacturing data globally improved in October, as Chinese, Canadian and US numbers where stronger than expected. The Institute for Supply Management (ISM) said its index of U.S. factory activity rose to 56.4 last month from 56.2 in September, the best print since April 2011. Economists had expected a reading of 55. In Canada the manufacturing sector grew at the fastest pace in 30 months in October, according to the RBC Canadian Manufacturing Purchasing Managers' Index. The headline number rose to 55.6, up from 54.2 in September.

    (click to enlarge)

    The Dow Industrial Average hit a new all-time high this week, but has not been able to convincingly push through the 15,700 area. Momentum has slowed while the RSI is printing near 61, which is the upper end of the neutral range.

    Stocks: FB, DIA, AAPL
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