Bounce off Early Lows & Some Leading Sectors

Notes for May 12th:

Let’s start with a question: does the jobs report and economic data keep the Fed at bay relative to raising interest rates? That is an argument that has been in the media since last Friday, but in the same period of time the  yield on the thirty-year bond has risen above the 3% mark. The ten-year bond is above 2.25%. Two weeks ago when the Fed was not expected to act on rates near term the yields were 2.5% and 1.85% respectively. That move tells me investors believe the Fed will act sooner versus later. The least we can say for the move higher in yields is the rate of change has been quick and that in turn makes investors nervous about how high yields will go in the short term. All said the rate of decline has instilled fear in the bond markets. The thirty-year bond is down 7.5% and the ten-year bond is down 2.1%. This is an area of concern and one to watch for the outcome near term.

Intraday reversal on the major indexes. The S&P 500 index hit 2085 in early trading, but closed at the 2100 mark. For me it is more the willingness of the buyers to continue to step in when selling picks up than the move off the low intraday. This is a market that the media has on life support, but the buyers are willing to step in and support what they deem is a positive and optimistic outlook. Still letting this unfold… up or down? Still the leading question in my mind and only time will provide the answer.

The lack of leadership remains an issue as well. In fact, tonight running the scan was interesting to see things like natural gas (UNG), gold miners (NUGT), crude oil (UWTI) and silver (SLV) near the top of the list as leaders. Some blame was given to the weaker dollar, but it is more the lack of commitment to stocks by investors looking for alternative places to put money to work. Commodities are rising as a result of interest rates, the dollar and speculation. I am not going to say that consumption or demand is rising enough to change the near term picture. But the move is good enough to trade with caution.

Charts of interest technically:

Crude oil (OIL) cleared the $12.38 resistance again today and still looks positive for the continuation of the break on the upside. Longer term view is still suspect, but the technical trade has set up nicely to move higher short term.

Turkey (TUR) moved back toward the top end of the range or base. Move above the $49 level would be of interest on a break higher.

Gold miners (NUGT) held break above the $25 resistance and following through on the upside.

Commodity Index Trust (GSG) uptrend remains in place with the test and resumption of the trend higher under way. Positive relative strength and above the 50 DMA.

Silver miners (SIL) breaking from the based and a confirmation move above the $9.30 level would be a entry point for the upside move.

Russia (RSX) continues the modest uptrend and is building on the strength of oil prices short term.

I will post more in the morning notes, but these jumped out on the preliminary scans tonight. Below is the link to the notes from today to give you more insight to the thought process for today.