October 27, 2013
Weekly Market Outlook
By Keith Schneider
Swimming through murky waters is easier to do than trying to make headway through sludge. The Stock Market swam through murky conditions this week to make new all-time highs, with hardly a pause. Murky conditions include: an overbought market from a technical picture, huge margin debt, and massive selling of smart money with continued pumping by the Fed.
Elon Musk, CEO of Tesla Motors went on TV and warned that his company is overvalued. In one of the more spectacular moves this year TESLA has gone from the mid 30's to over 190. It's not often that the CEO of a company warns its stockholders that his company is suffering from irrational exuberance.
Shareholder Activist / Value Investor extraordinaire Carl Icahn took off half of his bet in high-flying NFLX, causing a huge earnings beat into a rout for the stock as he booked a 500% profit for close to a cool billion dollar gain.
Margin debt has hit over 400 billion, a new record high and at such extremes it is often time to consider what Mr. Icahn has done, take some money off the table, or at least move up your stops.
Great earnings from Google and Amazon, a steadily improving economy along with improving employment, continue to be the fuel, certainly overwhelming the aforementioned yellow flags.
Many are calling this a great bubble just waiting to pop. Experienced hands know that calling the top is not an easy task, except for the most seasoned tape readers. As we mentioned last week, this market can continue on its trajectory for quite some time. There is also the possibility that the FED will figure out a way to unwind without having to sing the blues.
Watch this week’s video to find where our stops are for the key inflection points currently reside.
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