Commentary: Paul Ebeling on Wall Street



“Risk and Rotation are on!” — Paul Ebeling

YTD, Global M&A (mergers and acquisition) activity marked a record high for the 3rd month running in May, driven mainly by low interest rates, rising stocks and higher dealmaking interest in sectors that have received a boost from the VirusCasedemic chaos.

According to Refinitiv data, the total value of pending and completed deals announced from the January-May period touched$2.4-T, an all-time record. Last month, $532.9-B worth of deals were recorded, the highest ever for the month of May.

During the 5 months, 428 deals were struck, compared to 131 during the same frame last year.

What happened last wk

The May jobs report reaction was instructive. It determined there would be a bounce from the support in the indexes, or a fade to test the bottom of the range, it tested.

The Technicals

For 2 wks, the stock indices have moved North, some more so than others. Even with the Northside several sessions sported high-to-low action. They did not close negative for most, but there was high-to-low action. That means the indices opened higher and then closed below the highs.

Last wk stocks started premarket sessions significantly higher or lower and moved up down or sideways, some more so than others. For instance Thursday, the DJIA moved back up to basically flat and the S&P 500 recovered 25 pts to close off just 15 pts.

The NAS Comp and PHLX Semiconductor Sector (SOX) closed over 1% lower, but they also rose off of their session lows, as the NAS rose 66 pts from the low. Overall, Thursday, stocks rose off of the intraday lows, there was buying, selling and short-covering.

What to expect this wk

More of the same, plus:

.DXY down 0.1% while the Euro was up slightly Vs the Buck, at 1.2177 .

Now, it looks like the market really wants to be short dollars. To us it suggests there’s a risk chasing this move. It is a crowded position. We have already got a big bunch of the market that is net short USDs so if feels like we need a shakeout of those positions.

The FX market sees no reason for the Fed to change its dovish monetary policy.

Market participants will also be looking at US inflation data and the European Central Bank meeting, both Thursday.

In cryptocurrencies

Bitcoin was up 0.7% at 36,041 , while Ether was up 2.6% at $2,780 .

Have a healthy week, Keep the Faith!