Sell in May and Go Away,

Global Index Jitters Plus Non-

Farm Payroll Data

with Peter Esho April 27, 2014

This week sees a ramp up in US corporate reporting season. What we

saw last week is really key names on the indices starting to come out and

put out their earnings, and articulate their case for very hefty valuations

and also the future for earnings.

On Friday, we actually saw some disappointment in the market particularly

around the consumer discretionary names. They really did weigh on the

markets and that's what many traders will be looking forward to this week,

particularly Asian traders very early on Monday.

This week is very important for US corporate earnings because we see

very large key index constituents coming out and reporting their earnings.

The pressure is absolutely on for these key US names and all global

indices will be watching for leads from the DOW and the S&P 500 very,

very closely.

We have so far seen a lot more volatility on the NASDAQ which is skewed

towards high-growth names, but the DOW and S&P have held up

relatively well, and the pressure will definitely be on this week. We remain

cautious. We still think that the DOW, in particular, can continue to fall. It’s

a stance that we've held on to very, very strongly over the past few weeks

on. We think that the market should not be surprised if we see the DOW

come back in the order of about 5 to 10 percent in the month of May.

What will also be driving the markets this week is the non-farm payroll

number. It's the first Firday of the month and that means US jobs will be

out. The market is looking for a jobs number at about 200,000, and that

will really be the key focus for currency traders going into the week.

Last week, we saw the ECB coming out. Draghi again talking the talk, but

not necessarily walking the walk, and that's why we've seen the Euro

stabilizing at about 1.38 - 1.3850. We think that the Euro's gains have

capped out around here and we maintain our view, but eventually Draghi

will have to act. We might see some action sometime in mid May. There is

an ECB meeting around the exchange and trade situation on the 5th of

May so we look for a little bit of guidance there, but Draghi has continued

to leave the door open without any action, so it will be very interesting to

see how the Euro trades this week.

It’s also an interesting week for the commodities. We have seen the gold

price tick up about 1300 an ounce. We've seen copper price bounce very

convincingly above three dollars a pound and traders will be watching that

very closely.

Just on gold, remember to download our gold special report if you haven't

already, and that will really put you into a very good position for our live

market analysis on the 7th of May which will be focusing on gold. Plenty of

opportunities. We hope you have a very successful week.