The week’s economic data was mostly bearish, but there were a few positives with job market developments contributing to the rally in stocks. The weekly number of new jobless claims continued to drop quickly, with the total number of Americans on some form of aid also falling below 16 million. The CB consumer confidence number, new home sales, pending home sales, personal spending, the Richmond Manufacturing Index, and durable goods orders all missed estimates, and the first-quarter GDP print was revised lower. The Case-Shiller Housing Price Index, the Core PCE Price Index, and the GDP Price Index have all hinted at increasing price pressure.
The short-term technical picture improved for the second straight week, with all of the large-caps hitting multi-week highs, and the S&P 500 and the DOW getting close to their all-time highs. The S&P 500, the DOW, and the NASDAQ are all back above their 50-day moving averages, and the benchmarks are still well north of their 200-day moving averages. Small-caps finally showed signs of life this week, with the Russell 2000 successfully rising back above its short-term moving average and it is poised to rally to new yearly highs. The Volatility Index (VIX) fell sharply this week, plunging back below its 50-day moving average and getting close to its recovery thanks to the global risk-on shift, and the fear gauge finished near 16.5.
The key Advance-Decline ratio reached new bull market highs, as advancing issues outnumbered decliners by a 7-to-1 ratio on the NYSE and a 6-to-1 ratio on the NASDAQ. The average number of new 52-week highs dropped on both exchanges, falling to 85 on the NYSE and 67 on the Nasdaq. The percentage of stocks above their 200-day moving average continued to increase toward the tail end of the week.
Next week we will examine the new Basel III regulations set to take place at the end of the second quarter and their potential impact on the precious metals sector.