November 17, 2014
Weekly Market Outlook
By Keith Schneider
Putin left this week’s G-20 meeting being held in Australia early, but not before a snuggle session with an uneasy Koala Bear. Historically speaking, snuggle sessions and G-20 meetings have had little impact on the markets even when measured by the ECB (European Central Bank) in its April 2014 report.
Equity markets were left with an uneasy feeling as well as the bear because Russian tanks and military vehicles were seen crossing into the Ukraine through various porous cross border points. This is turning up the heat on the simmering crisis. We could attribute this behavior to the fact that Putin so thoroughly enjoyed his snuggles with the bear, he needed to immediately relive the experience by snuggling up even more to the Ukraine. Another viewpoint is that this is Putin’s response to the biting financial sanctions the West has placed on Russia for its actions in Crimea.
Gold, Silver and Oil prices all rallied sharply on Friday on huge volume after news came out that Putin was upping the ante in the Ukraine and OPEC was considering some production cuts to stabilize crashing oil prices and hopefully reducing some of the glut in the face of slow global growth amidst US production and consumption at close to even.
However, Friday’s technical action suggests that these markets are putting in what could be considered a short term bottom or even maybe more. Many long term bulls in Gold have reduced their holdings to their lowest levels in years, including the ADEN sisters who have one of the best track records in timing their trades in the yellow metal. Could the recent free fall been the big flush?
Several market indicators including the Advance/Decline line, Sentiment as measured by option volatility, and the number of stocks above respective key moving averages are all flashing sell signals. The backdrop that Republicans have threatened to shut down the government if Obama signs an executive order on immigration along with the fact that ISIS beheaded another US aid worker has those traders who are sitting on decent profits on a hair trigger to sell, eager to lock in year-end bonuses. The inside /pause day at or near new highs in most US indices is interesting to note. Price momentum is very strong in US Equities and of course that trumps all.
Every week you'll gain actionable insight with:
