November 9, 2014
Weekly Market Outlook
By Keith Schneider
The recent nuclear melt up of the US Equities markets right on the heels of what was looking like a meltdown to the core, finally had the markets mainly in digestion mode over the past several days.
Last week, the Japanese government announced that they were going virtually nuclear in terms of printing money and buying stocks with the proceeds. This week they are going nuclear for real as they announced they are flipping the switch back on some of their nuclear power plants. Considering the checkered history of nuclear power in Japan, this announcement triggered a one day chain (+13%) reaction in Uranium prices which have been in a free fall since the Tsunami that hit in March of 2011. That Tsunami wiped out several cities and caused nuclear fallout all over the globe. Currently, there are just over 60 power plants worldwide under construction and most likely this marks the lows for the beleaguered industry and for Uranium prices as well. Heck, if the Japanese can deal with turning the nuclear power back on, why not the rest of the world?
The relatively modest upward bias or consolidation in US Stock indexes masked some churning at these lofty levels. The albeit volatile market indicator of the number of stocks above their 10 day moving average dropped from extremely overbought to just overbought, while the longer term underpinnings improved.
The aftermath of the Mid-Term elections had players debating whether or not the normal historical seasonal patterns, coupled with the Republicans gaining majority of the Senate is more than enough ammo to have the markets go nuclear. The counter argument for those that see the glass half empty is that the very favorable stats of a strong market at this stage of the presidential cycle normally occurs after the stock market has been dormant in the preceding years. This clearly is not the case as the broad market was up over 25% last year and looking to put in a strong finish this year as well.
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