July 13, 2014
Weekly Market Outlook
By Keith Schneider
Recently Amazon and it’s CEO, Jeff Bezos took a lot of heat and ridicule when he announced that Amazon was developing drone technology that could allow Amazon Prime customers to receive their orders by drones in 30 minutes or less.
Bezos, obviously very serious about Drones, announced it is seeking FAA approval to move its drone testing outdoors, trying to move quickly to its goal of saving on annual shipping costs of $4 billion. Almost 86% of its customer order packages that weigh 5 pounds or less, which is where Amazon drone technology is focused on. Any reduction of those costs could really turn Amazon razor thin margins higher and more importantly give customers almost instant gratification and a strategic advantage no online retailer could ever match.
One of our prime picks on Thursday (MMM Premium Service), Amazon rocketed on the news up +5.6% or almost $19, on huge volume by Friday’s close. This helped NASDQ surge almost +.44 % higher on Friday. One final word on this; for those living in high rises don’t forget to leave your windows open.
Hidden amid US Equities Friday’s snapback move up (from a correction that included a nasty 1% drop Thursday’s opening ) in US Equities was carnage in the second tier / smaller cap issues that populate the Russell 2000 that is still very much underway. In fact, the IWM ( Russell 2000) is officially down on the year, not by much but still down, while the tech laden NASDQ 100 is up 7% with SPY not far behind, and the INDU basically one days range from unchanged.
This spread, while not that unusual, is a bit troubling as smaller cap stocks are certainly riskier plays than their bigger cap bretheren and this topping action in smaller caps points to some risk being taken off the table. Add to the mix is that Gold and Gold miners added to their gains this week and you at least have a yellow caution flag blowing in the wind. An interesting short term price pattern has developed in the indexes which bears watching very carefully so check out this weeks video
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