Weekly Market Update – OPEC Deal Disappoints, as Focus Shifts on the Federal Reserve
First and foremost, we want to start by saying today is an important day to recognize the brave souls that gave their lives to protecting the rights and freedoms of the people. We hope you spend some time on Memorial Day to recognize the veterans and families involved. Markets are closed on Monday in the US, and it has been a quiet session.
Last week was the week of oil trading, and all eyes were on the OPEC deal.
In our Morning Stock Market Update on May 25th at 9AM we talked about the 5 possible OPEC outcomes and how to trade each.
You can still watch the video here:
The bottom line of the OPEC deal was this, the market had steadily elevated their expectations over the course of the last two weeks. The price had rallied over 13% in the last 19 days. When a market makes this big of a run before an event, the real opportunity is betting on the downside against the trend.
In our morning update we said that we felt that no matter what type of deal happened, the market would sell off in reaction. Unless we had scenario 4 or 5 of the ones we talked about on YouTube, the upside was capped.
Our analysis was spot on, as OPEC announced a 9 month extension deal at the current production cut levels with out Libya or Nigeria jumping on board.
Here is a daily price chart of oil.
Weekly Market Update – Equity Markets Continued To Rip, On Weak Volume
Despite political turmoil, North Korean tensions and even a European terrorist attack, the equities market climbed to new record highs.
This move higher was concerning as it lacked the volume and conviction to attract the institutional buying that you are used to seeing before a break out of resistance.
I wrote an article discussing the lack of trading volume and how to find a short squeeze with options open interest.
Despite all selling pressure, the markets returned to a risk-on sentiment last week.
- SP500 Index finished the week up 1.4%
- Gold was also up over 1.00%
- Silver was up a whopping 3.50%
- Oil prices got hammered over 5% in one day, but finished the week a little more than -0.5%
Weekly Stock Market Update – Sector Overview
- Utilities finished the week up over 2.50%
- Technology closed the session up 1.67%
- Financials traded higher Monday through Tuesday, but lost moment end of week to finish up 0.7%
- Energy markets took the biggest high, down a total of 2.55%
Economic Calendar for Upcoming Week (High Impact Events)
The key event of this week will be on Friday, with the all important Non-Farm Employment report.
We will have a fairly active Thursday, with Manufacturing, ADP and oil inventory data.
Tuesday and Wednesday will be relatively slow, and the markets will likely consolidate to wait for the increased volatility into Friday’s report.
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The information contained in this post is solely for educational purposes, and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. TRADEPRO Academy is not responsible for any liabilities arising as a result of your market involvement or individual trade activities.