US Economic statistics remain mixed while the severe winter storms have continued to affect some indicators released during February including the ISM Manufacturing index which declined to an 8 month low in January. Similarly, industrial production declined by 0.3% in January and retail sales fell by 0.4%, a slow- down from the final months of 2013. In her first congressional testimony, the Fed’s Chairman Janet Yellen mentioned the weather related impacts on economic activity. More importantly, her testimony confirmed that the Fed will likely stick to its current policy and “reduce the pace of asset purchases in further measured steps”. Unemployment continued its slow decline and fell to 6.6% in January coming very close to the Fed’s threshold of 6.5% although it is expected that the Fed will revise its forward guidance broadening out the number of targets The S&P 500 increased by 4.6% in total return terms over the month with the NASDAQ index beating this with a return of 5.0% reflecting outperformance in IT and biotechnology stocks. Food and drug retailers were the best performing sector of the S&P 500 followed by cyclical sectors such as Chemicals, Construction and Autos. US government bonds reported modest returns with the 10 year US Treasury producing a total return of 0.5%
Money drives our stock market. If you have lots of money, you have the ability to encourage prices to move the direction you want. After all, the market is about supply and demand and if you have the money to suck up the available supply, the share price is more likely to rise. Strong hands are people with money.
The STI closed with a bearish island top chart pattern @ 3,246.32 (+31.49, + 0.98%) with extremely high volume done at 415.2m shares on Tuesday, 15 April 2014. Total of 2.6 billion shares done valued at S$1.77 billion, gainers beat losers 250 to 205. The STI has a spinning top @ 3252.91 (+6.59, + 0.2%) with volume done at 54.8m shares on 16 Apr 2014 at 10.30am. Expect a formation of a bearish evening star pattern on the STI.