Daily Market Review 18.05.2015

STOCKS

Every trader wants to find that diamond in the rough – that one stock that is going to perform well and boost one’s trading capital. According to Dan Wantrobski, a technical analyst at Janney Montgomery Scott, he has uncovered a variety of stocks which are currently showing positive chart patterns which could result in a bullish breakout as early as this summer. First on Wantrobski’s list is McDonald’s Corp. (MCD, +0.34%). While this fast food giant has failed to impress over the last year, the stock has slowly been building a bullish base on the long term weekly charts. McDonald’s is a component of the Dow Jones Industrial Average (DJIA) and while the company’s stock has declined 4.5 percent over the last 12 months, the DJIA has advanced 11% over the same period. As a result, 18 analysts surveyed by FactSet have rated McDonald’s stocks as sell or hold. Despite this and according to Wantrobski, McDonald’s stocks are expected to move back above $100 each. This is based on the strength of the large capitalization sector compared to the S&P 500 index (SPX). According to Wantrobski, McDonald’s shares should rise about 7% above their current level to trade at around $104 to $105 a share. So do you think Wantrobski has found that diamond in the rough or is McDonald’s likely to sizzle away?

INDICES

Despite a volatile trading session on Friday, U.S. stocks ended the week higher while the main indices booked weekly gains. As a result of weaker than expected economic data released on Friday, investors are uncertain regarding the timing of interest rate hikes by the Federal Reserve. Before the market opened on Friday, data showed that industrial production declined by 0.3% in April. This marked the 5th straight decline in output. Also, the Empire State manufacturing index moved into positive territory yet missed analyst expectations. At the close of trading, the Dow Jones Industrial Average (DJIA), which had gained 0.5% over the week, closed 0.1%, or 20.32 points, to 18,272.56. Also on the upside was the S&P 500 index (SPX) which rose 0.1%, or 1.63 points, to 2,122.73 which marked a new record high. For the week, the benchmark index gained 0.3 percent. Meanwhile, the Nasdaq Composite index (COMP) ended the trading session on Friday 2.5 points lower. The tech heavy index did however gain 0.9 percent over the week.

CURRENCIES

The U.S. dollar (USD) failed to impress on Friday as a result of poor economic data out of the country which prompted concerns regarding the strength of the economy. According to the Federal Reserve, industrial production in the U.S. declined last month by 0.3%. This missed expectations for an increase of 0.1%. Also, the manufacturing production in the country was flat which also missed expectations for a 0.2% increase. Also on Friday, the University of Michigan reported that their consumer sentiment index declined to 88.6 in May. This was down from 95.9 in April and also marked a 7-month low. The EUR/USD traded at 1.1427, up 0.20% while the GBP/USD traded at 1.5795, up 0.13%. Meanwhile, the greenback traded higher against the Japanese yen and the Canadian dollar with USD/JPY trading at 119.34, up 0.12% while the USD/CAD also advanced 0.19% to trade at 1.2009. The U.S. dollar index held steady at 93.39.

COMMODITIES

In Asia, in early morning trading on Monday, crude oil prices gained. This comes as investors now turn their attention to industry data in order to get a better indication of the supply and demand of the commodity over last week. WTI crude oil for delivery in July traded at $60.63 a barrel, up 0.14%, on the NYMEX. Meanwhile on Friday last week, crude oil prices declined yet ended the week higher as a result of a weaker U.S. dollar (USD). Also on Friday, Brent crude oil for delivery in July traded at $66.97 a barrel, up 0.2%, on the ICE Futures exchange. On the week, the benchmark contract rose 0.98 percent.