Early on the day the stock indexes were under pressure due to the eurozone and the USA’s debt problems. Even though the debt ceiling issue isn’t resolved some investors still consider the US dollar as a safe asset. It gained 0.5% versus the basket of major currencies. Gold, another safe asset, gained 0.8% reaching $1601/oz.
As for the last week, S&P500 lost 2.5%. The major movement was seen last Monday because of the financial situation in Italy. The EU’s fragile banking system remained in focus during the entire week. However, in the middle of the week FOMC meeting minutes hinted at the possibility of QE3.
Ben Bernanke confirmed the stand last Wednesday but the next day he changed his mind, saying that the Fed Res wasn’t ready to act. It is natural that the FRS will be discussing this question taking into account the latest worsening of the US economic data. However, plain discussion cannot guarantee further quantitative easing because of employment data with a glance at deflation.
At the end of the week the markets focused on the warnings made by some rating agencies about the USA’s credit rating. Моody’s and S & P’s warned: the country’s rating will be reconsidered if the US debt ceiling isn’t lifted in the short run. At first the markets were down but then they recovered because in fact these warnings hadn’t reported anything new.
Besides, today European banks are passing the second round of stress tests. The results of Core Tier 1 (the 1st round) show that 82 out of 90 banks passed the tests. Among those who failed the tests are 2 Greek, 1 Austrian and 5 Spanish banks.
During this week over 300 companies are to report on their earnings for the 2nd quarter: SLB, IBM, CAT, PEP, МОСА, STLD, SNDK, BAC, KO, GS, JNJ, HON, AAPL, ABT, МО, BLK, USB, UTX, ADS, AXP, BIDU, XRX, EBAY, INTC, QCOM, T, , LLY, F, FCX, MS, FFIV, WFC, WDC, GE, MCD, VZ, YHOO and many others.
June’s CPI declined by 0.2%, which is slightly worse than expected. June’s Core CPI gained 0.3%, or 0.2% better than expected.
The following sectors grew:
· Utilities +0,1%
· Technology +1,0%
· Energy +2,6%
· Consumer Goods +0,2%
· Basic Materials +0,8%
The following sectors declined:
Financial - 0,4%
Healthcare -0,5%
Industrial -0,2%
Telecommunications – no change
The changes in the world’s major stock indexes (July 15th):
DJ30 gained 0.34% (12479,73)
NASDAQ gained 0.98% (2789,80)
SP500 gained 0.56% (1316,14)
These data shouldn’t be taken into account by mid-term and long-term traders. The analysis of S&P500’s weekly chart indicates that the index has been moving within a wide range ($1251 - &1377) almost since the beginning of 2011.
According to the Department of Market Sentiment analysis, , there is a significant increase in the volume at down-bars, which means that the bearish sentiment is steady when it comes to trading in the US stock market. The price is in the process of forming the classic reversal pattern called “Head and Shoulders”. If it is formed the index may fall down to the area of $1257 - $1251. If the price consolidates below $1251 the bears will get a chance to drop the index further down to $1187 - $1176.
