August 10, 2014
Weekly Market Outlook
By Keith Schneider
“Yes I'm stuck in the middle with you,
And I'm wondering what it is I should do,
It's so hard to keep this smile from my face,
Losing control, yeah, I'm all over the place,
Clowns to the left of me, Jokers to the right,
Here I am, stuck in the middle with you.”
Song by “Steelers Wheel “
The Obama presidency is mired in the Middle East yet again, having to step in and protect the Kurds who are under extreme pressure from the most aggressive, outrageous Islamic Jihadist group that even Al Qaeda has distanced themselves from, as well as trying to navigate the Israeli/Gaza conflict and sort out the mess in Libya. Of course things are still on a slow boil in Syria. No matter what course Obama takes in choosing whom to rescue and which conflict to actively engage in, will enrage someone. There are genuine humanitarian concerns all over these war torn areas and the adage of “ you break it, you own it” still prevails in Iraq, so of course we are trying to reverse the extraordinary gains made by those radical jihadists. Did I forget to mention that Iraq has a little bit of oil?
Meanwhile, Russia is massing troops on the Ukrainian border and Poland not wanting to be next on its annexation list, sent out an alert this week to NATO. For those who are willing for go into the freezer and bring out a map of the cold war, Poland was a Soviet satellite, so this is not a trifling matter for the Polish people.
The US Equity markets until mid-july were able to shrug off all this political uncertainty but with these multiple blows the markets actually succumbed with the smaller cap Russell 2000 tracing out a potential major top. If it does violate the recent lows it is most likely enough to bring all else with it. However, Friday’s market action brought the markets up on the week, a testimony to the markets resilience, and if this is a top, it illustrates just how long tops take to mature. Further disruption to critical oil supplies could also pressure stocks; in the meantime, short term market internals are oversold.
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