July 20, 2015
Weekly Market Outlook
By Keith Schneider
The global equities markets responded favorably to keeping Greece in the Euro. The S&P 500 had one of its strongest weeks recently, ending up over over 2% with the NASDQ 100 up over 5%, led by blowout earnings in Netflix and Google. Google alone added more market cap this week than almost 400 of the S&P 500 components combined.
Banks in Greece are set to reopen and they might even have some cash to dispense. One thing missing in the global picture is a positive response of the Greek stock market which is still languishing nears its lows. Looking at the charts, the Greek bailout seems more like a bailout of the bondholder’s rather than Greece itself. Of course, the Greek government will have to privatize and divest themselves of core assets to reduce loan amounts and fire thousands of workers to meet the tough measures laid out by the EU, led by Germany. The divestiture includes airports, energy companies, electric companies, and marinas. Anyone interested in buying into a package deal for some classic Greek architecture that includes the Parthenon, please contact [email protected]. The real point here is that the drama is far from over and the response from the left throughout the EU is far from squashed, therefore the global economic issues far from resolved.
The big move in NASDQ 100 (QQQ) leading to all- time highs masked weakness in breadth. The usual suspects in looking at equity performance are indexes like the S&P 500 and QQQ’s which are primarily constructed using market capitalization. This week’s blow out responses to earnings by Google, Netflix, and huge moves in Amazon, Facebook and Tesla fueled the rise. NASDQ roared led by the generals. Where are the troops? Interesting is that the non- market cap NASDQ100 index closed unchanged. Sentiment is running very rich as well, with our volatility indicators blowing out. In this week’s video we are going to take a look at an index that is NOT cap weighted that highlights just where the troops are lingering.
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