May 11, 2014
Weekly Market Outlook
By Keith Schneider
In one of the most difficult markets to trade, highlighted by the disparity between small caps, high flying momentum stocks and big caps, the question remains... what forces have been pulling those stocks down? Will those forces persist and end up sucking the well performing big cap names down, or will that Dark Matter dissipate and end up overwhelmed with another blast upward?
A prime example is the fall of Amazon from its all-time high put in this year at just over $400 to its recent swoon to 290, or a drop of almost 30% in just three months. The story hasn’t changed much, Amazon is an expert in convincing investors that it is interested in market share, not profits and could turn in massive sales into a bonanza at any time.
Has that psyche shifted? Is Wall Street no longer buying that story? Has it changed to Show Me the Money? If so, then that Dark Matter could be human psychology and if that has shifted, then it’s not likely to return quickly to its original state. Additionally, if this psychology is the cause and it spreads to other asset classes then get ready for some turbulence. Random Walkers take notice as this where the charts and behavioral finance intersect.
For the record, this week the Dow closed at record highs while NASDQ had its worst down week in over a month. The irrational drop in interest rates while the Fed continues to taper was stopped in its tracks as well this week, so there is a glimmer in the universe that this market might have regained its sanity. The dollar also bounced off support as well, a potential bottom for the Greenback.
Let’s go to this week’s video where we will cover the usual suspects and some surprising new ones where a new bubble might be blowing…
Every week you'll gain actionable insight with:
