A Possible Upside Breakout for US Equities and Midstream MLPs

By February 5, 2015August 9th, 2016Weekly Market Observations (Archives)

By James Dondero | February 5, 2015

  • While we still believe that deflation is likely to be the dominant theme for 2015, the downtrend in crude oil appears to be reaching the point of exhaustion. We believe crude has found its low and is in the process of tracing out a v-shaped bottom. We also believe midstream MLPs may be poised for an upside breakout; learn more in our most recent white paper.
  • Interest rates also bounced this week but still remain within a larger downtrend as they converge toward similar yields in Germany, Japan, and other developed nations. High yield bonds outperformed treasuries on the week, a move which may help boost stocks going forward.
  • Of particular note in the US this week has been the strength in consumer discretionary stocks. This, coupled with similar outperformance in the mid-caps, suggests these sectors may be poised to lead the broader market averages higher.
  • Finally, the overseas markets remain mixed. The DAX continued to move higher as investors get more comfortable and enthusiastic about the intervention by the ECB. Meanwhile, emerging markets remain weak, with India still showing the most promise.

The views and opinions expressed are for informational purposes only and are subject to change at any time. This material is not a recommendation, offer or solicitation to buy or sell any securities or engage in any particular investment strategy and should not be considered specific legal, investment or tax advice. There is no guarantee that any of the forecasts will come to pass. Past performance is no guarantee of future results.