ENERGY PRICES RECOVER
This past week the equity markets in the U.S. fell for the third consecutive week. The Dow Jones Industrial Average closed the week at 17,535.32, a decline of 1.16%; the S&P 500 closed at 2,046.61, down .51%; and the NASDAQ fell .39% to close at 4,717.68. The Dow Jones Transportation Index slumped the hardest, with a loss of 2.99%, closing at 7507.31.
Technical Indicators: It has appeared for several weeks as though technical indicators were softening. We have observed that even when the equity indexes reported gains, volume did not support market advances. Volume has been weak. This is the first week when the technical indicators, especially for the NASDAQ, turned distinctly negative.
European and Asian stock indexes were mixed this week. The German DAX gained .84%, while the FTSE 100 rose .21%. In Asia, the Nikkei Index gained 1.90%, the Shanghai Composite fell 2.96%, while the Hang Seng lost 1.91%. Russia benefited from stronger prices of oil, and their Micex stock index rose accordingly.
Oil Prices: Many commentators have been predicting lower oil prices for several weeks. The failure of the OPEC producers to reach agreement on a freeze in production, combined with large increases in production by Russia, the Saudis, and Iran, were bound to put pressure on prices. However, there have been several disruptions of oil production, which have caused in oil prices to rally strongly. Brent crude oil has risen five of the past six weeks, closing this week at $47.84 per barrel, a rise of 5.56% on the week. Visit The Global Macro Digest® for articles on this subject.
(See The Global Macro Digest®: Energy:
3 key reasons why oil has NOT bottomed yet: Oil analyst Kilduff; and
Oil prices rise on Nigeria, Venezuela disruptions
Furthermore, some commentators have expressed suspicions that some traders are manipulating oil prices. Visit The Global Macro Digest® for articles on this subject.
(See The Global Macro Digest®: Energy:
“Holding 30% Of June Brent Crude Contracts, Is Glencore Manipulating Oil Prices?”)
If you believe that a decline in oil prices is imminent, you might want to consider the following inverse exchange traded funds (ETFs) that would benefit from falling oil prices.
DTO Crude Oil Double Short
DWTI Inverse Crude 3x
SCO Ultrashort Crude
DNO U.S. Short Oil
Precious Metals: Mining companies have risen five of the past seven weeks. We have commented that mining company stocks have actually performed much better than spot price of gold itself. However, this past week most mining companies followed the gold price lower. COMEX gold lost 1.67% on the week. Of the mining companies that we have been following, only three were able to defy the trend. Agnico Eagle Mines (AEM), Newcrest Mining (NCMGY), and Eldorado Gold (EGO) all gained on the week. Here are the closing prices for the mining companies that we have been following.
Mining Companies Gains/Losses for Week Ending May 15, 2016:
Closing Price Weekly Change 3-Mo Change
Randgold Resources (GOLD) 88.34 -1.24% -2.76%
Goldcorp (GG) 17.96 -6.41% 16.25%
Franco-Nevada Corp (FNV) 67.74 -3.56% 17.97%
Agnico Eagle Mines (AEM) 46.20 .35% 33.41%
Newcrest Mining (NCMGY) 15.11 1.00% 34.31%
Newmont Mining (NEM) 34.07 -.18% 37.16%
Barrick Gold (ABX) 18.41 -.32% 46.58%
Eldorado Gold (EGO) 4.87 18.49% 66.78%
New Gold (NGD) 4.53 -1.52% 50.50%
The Global Macro Digest®
