May 28, 2010

Market Wrap: for the week ending May 28, 2010

• Fitch downgrades Spain's AAA credit rating down a notch to AA+ (WSJ)
• US consumer savings jump to highest level since January (FT)
• US personal income in April 2010 increased 0.4% from March 2010 (ESA)
• US consumer sentiment at 73.6, up slightly from April's reading of 72.2 (Reuters)
• The OECD raised its forecast for global economic growth to 4.6% in 2010 (Economist)
• Revised numbers for real GDP in the US show a growth of 3.0% in Q1 of 2010 (BEA)
• Australian government might make changes in its proposed mining-profit tax (Bloomberg)
• China denies a rumor that it had plans to avoid Euro-zone assets (WSJ)
• Apple overtakes Microsoft as biggest tech-company measured by market value (Reuters)
• Sales of new single-family homes were up 14.8% over the revised March rate (ESA)
• US durable goods orders in April 2010 increased 2.9% from March, to $193.9 billion (ESA)
• Industrial new orders for March were up by 5.2% in Euro area (Eurostat)
• US National Home Price Index fell 3.2% in the first quarter of 2010 (S&P)
• US consumer confidence increased to 63.3,  up from 57.7 in April (Conference Board)

Weekly Market Barometers    
Stock-2010-0528   FX-2010-0528

Charts Of The Week  
An extremely volatile week ended with the US markets almost unchanged.  After the “fat-thumb” trading scare earlier this month, the S&P 500 dropped below the widely watched 200-day moving average but had a strong turn-around to close the week at 1,089.41.  In the US, this was the last trading day for May and as usual for this time of year, the old saying “sell in May then go away” comes to mind.  Traditionally, this has been a fairly good rule of thumb but of course it did not work out in 2009. Investors would have missed out on one of the strongest bear market rallies if they had sold in May of last year.

What’s it going to be then this time around?  Aside from the often heard V-shaped recovery theme, there are a number of varying opinions on the shape of the recovery from hereon.  Below are some of the more popular predictions  - take a pick as to which shape seems most likely...

S&P 500 below 200 day moving average   Nouriel Roubini: Double Dip (W)
SPX-2010-0528D   SPX-Roubini
James Altucher: Check Mark   George Soros: Square Root
SPX-Altucher   SPX-Soros

Good luck and good investing!

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