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I receive a weekly market update from a previous work colleague that I would like to share with you. He provides a very nice summary of the week’s market activity that is concise, while providing a great overview of market conditions and trends. Please be sure to read the disclaimer at the bottom of the summary. You can also subscribe to this weekly newsletter if you find it useful.
Market Update – June 17, 2011
The S&P 500 finished the week relatively unchanged, up from last week less than 0.1% to finish at 1,371 vs. 1,370 last week. Over the same time frame, the Dow was slightly better off, gaining 0.4% and barely beating the 12,000 mark at 12,003.
Producer prices increased modestly in May, rising 0.2%. The May consumer price index rose 0.2% with the core price index rising 0.3%. For the 12 months ended in May, the overall CPI is up 3.6% while the core number (excluding food and energy costs) is up 1.5%. Core inflation is well within the Fed’s target of 2%. Initial unemployment claims improved to 414k but remain above the 400k level that signals improvement. The Michigan consumer sentiment reading dropped to 71.8 more than expected.
The June New York Empire State manufacturing index fell to -7.79 against expectations of an increase of 12. The report suggested that supply shortages caused by the Japan disaster hindered production. The Philly Fed index was also negative at -7.7. Negative numbers on these indices suggest contraction, although the supply interruption mitigates that concern.
The European sovereign debt concerns remain, although France hinted at a bailout for Greece, lifting European markets on Friday. Oil has declined markedly over the week and is trading around $93 at the end of the week.
Technically, the S&P 500 remains in a downward trend as the highs of the week failed to surpass the previous week highs and a new low was set on Thursday. The daily stochastic has eased up from last week’s lows suggesting the possibility of some level of retracement after a long steady selloff. The MACD has leveled off with the flat week, but is still declining. The longer term view from weekly charts shows both indicators pointing down.
It seems reasonable to expect some level of rebound after 7 weeks of downtrend. The uptick in the daily stochastic suggests that possibility, but it could also be a pause before continuing down. Rallies over the last couple of weeks have failed to generate support or momentum beyond a day or two. Good news on the European debt front may give the markets the lift they need, but for now the downward trend remains in place.
That’s it for now; please feel free to forward this to friends who may be interested. If they want to subscribe, have them send me an email. If you’d like to unsubscribe from this weekly email, reply to this address with Unsubscribe in the subject line.
Bill Connors, CPA
Vice President
512- 275-0814 direct
512-422-8344 cell
512-476-5754 fax
http://www.riverstonewealth.com/
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