September 29, 2014
Weekly Market Outlook
By Keith Schneider
After this week’s debut of the Alibaba IPO and the subsequent roller coaster ride that equities endured which included the 250 plus point one day slide on Thursday, one might conclude that Alibaba is named appropriately; they just forgot to add the 40 thieves (the big US brokerage firms). The last time Alibaba went public in Asia, it lost 90% of its value before going private, losing billions for the initial investors. It’s no wonder that Hong Kong regulators had trouble with the new IPO. Try to find some information on the original offering and other than finding that ALBCF is a defunct symbol there seems to be little evidence that it existed. One might think that a company that just raked in 25 billion of mostly US investors, some historical information might be pertinent but it was almost impossible to dig up any details of the original IPO and subsequent delisting on the internet. So, the huge sucking sound in the markets this week was a combination of shock in the aftermath the Alibaba IPO, the September triple witching, seasonally the weakest month of the year.
Junk bonds, Emerging market debt, and sentiment indicators are flashing warning signs to one of the longer running bull markets. Gold, Silver dropped sharply as deflationary pressures continue to manifest. The ratio between bonds and gold continues to widen, which is generally a great indicator of inflation/deflation. The selloff in Junk debt, Gold, and the continued weakness in small caps still linger over the market. However, from a pure price and trend perspective regarding US Equities, the Nasdaq 100 long term weekly trend line is well intact, with the Russell 2000 in weakest position.
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