A great report. The market breadth issue is meaningful and as the guys only comment on the technical I’d just make the point that this is fully explained by the shift back down in US fixed income rates in the last 4 weeks. The ten year today has slipped back down to 2.5% and this is providing a wonderful tail wind again to all equity sectors inc the utilities as the threat of higher interest rates has receded, for the moment. The combination of the ‘super dove’ Yellen’s appointment as well as the Bernanke pull back from the “taper” as well as the weak economic data is driving the hunt for yield yet again. Breadth expansion looks correct given these drivers.
Asset markets covered include the US indexes, Euro indexes, Asian indexes which are hitting resistance levels, commodities inc oil, the softs and bullion which the team have scored correctly on.
I’m a little surprised they haven’t picked up on the dollar basket key level issue. Its critical to the commodity sector. Oil’s seasonal issues are clear and drive forward allocations by the large participants, self for filling in this way. My point here though is ‘from failed moves come fast moves”. Ie large participants could easily be wrong footed by the USD developments. And no where would this be more acutely felt than in the oil asset class. It would be most acutely felt here due to the seasonal expectations of participants. Watch oil for a sharp reversal should the US$ weakness continue. If oil reverses it could be explosive and feed quickly into the various commodity indexes whose weightings are skewed to this asset class.
Ill leave the rest to the excellent Swiss team here:
Luck to all
Rich
(18 votes, average: 4.89 out of 5)
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