Possible Breakouts at Hand!

By James Dondero | April 23, 2015

  • Among the bigger developments this week has been the continued strength in crude oil, which is close to breaking through the key $58/barrel level. While we remain bullish on the US Dollar longer term, should the greenback fall into an extended consolidation phase as we expect, it could help crude ‘breakout’.
  • The strength in crude helped interest rates firm on the week. Stepping back, yields globally continue to be on a path toward convergence, with those in the US playing catch-up to those in Europe and Japan. The exception of course being Greece, which has seen 3-yr sovereign paper trade in the 25-30% range as uncertainly over a bailout intensifies.
  • US stocks continue to move higher with the technology, consumer discretionary and health care sectors leading the way. Given the market has now spent several months trading sideways (digesting gains in an orderly fashion) a rally from here may well have more ‘oomph’ than many expect.
  • Finally while markets overseas look to be in pullback mode, we believe dips could be buyable. Examples include those in India and Germany which are now trading near their 200-day, and 50-day moving averages, respectively.

 

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