The S&P 500 struggled at the 2,100 level this week, after a mixed bag of weak U.S. economic data and a lower economic growth forecast from the International Monetary Fund (IMF), but managed to close at 2,081.18, down 0.99% for the week, despite the sell-off on Friday. The big support for the S&P 500 this week came from the energy sector, as the spot price of Western Texas Intermediate Crude (WTIC), traded on the Chicago Mercantile Exchange (CME), shot up to an intra-week high of U.S. $57.42 per barrel on Thursday, up 10.87% from the last Friday close of U.S. $51.79. 

The Friday sell-off was initiated in the European markets, lead by the DAX which was down 2.58%, and spilled over into the U.S. markets. The panic alarm was set off as the Chinese government said on Friday that its new trading regulations will allow fund managers to lend stocks for short-selling and expand the number of stocks investors can short, to increase the supply of securities in the market. 

Retail investors in China have been borrowing record amounts of money to buy stocks on margin, pushing trading volumes to the bubble stage. The headline news sent the China H-Share index futures Apr 15 traded on the Hong Kong Exchange (HKE) tumbling 4.77%, to 14,413 in afterhour trading.

The market concerns about a Greek default spiked after the International Monetary Fund (IMF) Chief Christine Lagarde warned Greece not to skip the IMF debt payment or else the country would be put into the club that includes Zimbabwe, Somalia and Sudan, countries that hold the dubious distinction of having fallen into arrears with the IMF. Greece has their 1 billion euros IMF debt repayments coming due in early May.

The S&P ratings agency already downgraded Greece’s long and short-term credit ratings this week, to CCC+/C from B-/B, citing “unsustainable” debt and other financial commitments. The ratings could drop to C/C, meaning a default is imminent if Greece skips the IMF debt repayments. 

The U.S. Commerce Department said on Monday that U.S. retail sales edged up 0.9% in March, the first gain in four months but still missing the Wall Street consensus forecast of 1.1%. Retail sales excluding autos rose just 0.4%, also missing the forecast of 0.7%. 

The IMF said on Tuesday that they revised their growth forecast for the U.S. to 3.1% this year and next, from 3.3%, citing currency headwinds that restrain growth. A strong U.S. currency may be a good thing for U.S. bond investments, but not for multinational corporations, where revenues and earnings are negatively impacted by currency fluctuations. 

A mixed bag of weak U.S. economic data put downside pressures on the U.S. dollar index (DXY), a weighted geometric index of the value of the U.S. dollar relative to a basket of six major currencies, as the currency market is re-pricing the timing of the first rate hike. Crude oil, which is traditionally traded in inverse correlation with the U.S. dollar, surged in response to the weak U.S. currency.

The WTIC crude price shot up 3.36%, to U.S. $55.08 per barrel, on Wednesday after the U.S. Energy Information Administration (EIA) weekly report showed that crude oil inventories had a build of 1.3 million barrels to a total of 483.7 million barrels, the 13th consecutive week of builds and a higher total than at any other time in at least 80 years. Analysts had expected a build of about 3.25 million barrels. 

Last week, Goldman Sachs sent out a research note saying that both U.S. oil production and stockpiles of stored inventories could peak in April and shrink from May until August, amid a record drop in U.S. oil drilling rigs. It remains to be seen whether Goldman made a right call as it seems that Organization of Petroleum-Exporting Countries (OPEC) keeps pumping oil, while non-OPEC countries are cutting their capital expenditures and production.

OPEC said on Thursday that its March production jumped 810,000 barrels per day (bpd) to 30.79 million bpd, or a 1.58 million bpd increase, compared to the February production of 29.21 million bpd. 

The U.S. dollar index took another 0.92% hit on Thursday after Mr. Dennis Lockhart, president of the Federal Reserve Bank of Atlanta and known a policy hawk, said that the data available for the first quarter of this year have been notably weak and “heightened uncertainty” about economic growth makes waiting to hike interest rates more feasible. 

Mr. Lockhart’s comment was made on the heels of the release of the Federal Reserve’s beige book, an anecdotal roundup of business conditions at the 12 Fed districts, showing U.S. economy is still growing but slowly.

For the week, the U.S. dollar index tumbled 1.9% to close at 97.707 on Friday, while the 10-year U.S. Treasury bond yield was down 4.31% and printed at 1.865% at the close on Friday. One may want to pay attention to this bond yield as a red flag, as the 10-year U.S. Treasury bond yield is about to break down and is heading to retest the 52-week low of 1.68%, set on February 1.

The best performing S&P 500 sector for the week was Energy, up 2.2%. The worst performing sectors were the S&P 500 Industrials and Consumer discretionary sectors, down 2.24% and 1.96%, for the week respectively. General Electric Co. [NYSE:GE], constutient of S&P 500 Industrials, gave up 4.45% for the week after posting Q1 revenues that were worse than analysts’ estimates. Investors sold off companies like Wal-Mart [NYSE:WMT], down 3.43%, and Target [NYSE:TGT]. down 4.27%, for the week after the weak U.S. retail sales report.

From the technical viewpoint, the S&P 500 failed to break out the upper trendline resistance of the symmetrical triangle, at the 2,100 level, and is now back to retest the 50-SMA and the 2080 level. The S&P 500 could bounce off the 2080 level and try a third breakout. In the symmetrical triangle breakout event, our near-term projected target of the S&P 500 is 2,209. 

If negative sentiments persist, the S&P 500 could move downward to retest the lower trendline of the symmetrical triangle, at the 2,066 and 2,061 levels. If those two supports fail, there are still technical supports at 2,045, 2,033 and the 200-day SMA. 

S&P 500 Summary: +2.1% YTD as of 04/17/15
Barclay Hedge Fund Index: +2.52% YTD

Outperforming Sectors: Healthcare +7.00% YTD, Consumer discretionary +4.23% YTD, Materials +2.03% YTD, and Energy +1.91% YTD. 

Underperforming Sectors: Consumer staples +0.91% YTD, Telecommunication services +0.31% YTD, Information technology –0.02% YTD, Industrials –1.08% YTD, Financials –2.48% YTD, and Utilities –6.66% YTD.