Stock market finished slightly higher this past week as corporate earnings continued to outpace analysts' estimate. Although we are just two weeks into the earnings season, investors may turn back their focus into the economic fundamental ,where initial claims continued to exceed forecasts for 9 consecutive weeks, which are becoming a concern as the next employment data is approaching. While data remained weak on both jobs and housings front last week, the Treasury yield curve took a small step back into its initial rally point back in early March. Next week, the market will be focusing on the FOMC meeting and the first quarter GDP result, which will be a volatile week for the bond market.
Technical Highlights:
? Stocks are facing upward pressure from treasury yields as bonds continued to stay strong.
? The short term equity trend turned bearish as all three major indices failed to stay above their 50day moving average.
? RSMC rallied strong on both consumer staples and healthcare sectors, which indicates that money are flowing into the defensive stocks ahead of the next major trend start.
? Defensive stocks outperformed the market while all other sectors were holding small gains; Historical returns suggest that defensive stocks should continue to stay strong forward looking.
? While bonds are enjoying its low rates trading range, the short-term maturity bonds are suffering ahead of next week FOMC meeting.
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