Crude Sets a Meaningful Bottom

By James Dondero | May 15, 2015

  • For the week, the dollar looks to be consolidating and will likely continue to range trade. Crude’s recent move through $58 along with its 20-wk moving average finally suggest a meaningful bottom might now be in place.
  • Bond rates look to be at the top end of the range with strong resistance for both the 5 yr and 10 yr. We also believe a possible rate hike in June by the Federal Reserve is now off the table.
  • The tone of the tape for equities looks to be more bullish than bearish. The high yield/treasury ratio looks to be signaling risk-on for equities while the XLF (financials) could be confirming an index uptrend. The Russell 2000 was also well above support for its 40 week moving average. Biotech also held support while utilities, staples and REITs may be reversing as rates begin to hold.
  • Overseas, India had a nice bounce for the week while the DAX looked to remain at support levels. China also looks to be scaling in.

 

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