Consolidation since March

It was a good day for U.S stocks on friday. The Dow up +0,27%, S&P 500 +0,37% and Nasdaq +0,52%. Japan`s Nikkei is down today -0,64%, while Hang Seng is almost flat -0,04%. Copper is up +0,75% today, while Silver advance +1,14%. Gold is up +0,61%,Crude Oil (brent) is up +0,33%.

European stocks are in a red territory so far today. Stoxx 50 -0,57%, FTSE 100 -0,32%, CAC 40 -0,17% and DAX is down -0,35% so far today. Investors are waiting for the next Governing Council meeting on June 5 in Frankfurt.

It is expected that ECB (European Central Bank) will ease policy. The reason why this is expected is mostly because of what`s been saying in May 8 meeting. Draghi said that policy makers are «dissatisfied» with the inflation outlook and «confortable with acting next time».

Some speculate that it will cut the benchmark rate by 10 basis points to 0,15%, and the deposit rate, which is at zero. Denmark ended its experiment with negative rates last month. ECB`s inflation goal is just under 2%, but the inflation is below 1%.

The inflation has been below 1% since october and the Euro is strong. The currency has risen more than 7% against the dollar since early July 2013. The Euro climbed as high as $1,3993 on May 8, right after Draghi spoke. EUR is now trading at $1,3719.

Take a look at S&P 500 Large Cap Index.

SPX 19.05.2014

Many bulls and bears are frustrated. They are both waiting for the index to move, but the SPX have been in a consolidation for many weeks and months now. It all started in Mars this year. Investors are not waiting for consolidation, but rather correction. That`s why they are frustrated. The SPX is flirting with 50MA, which is at 1867,88.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Filed under Quantitative Easing, Stock market

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