There is a debate going on right now about the strength of the market. Some do not like the fact that the market is being led by more conservative sectors: health care, staples, and utilities. They argue that at this point we should see more growth oriented segments of the market doing better. They also point to recent economic releases and quarterly earnings as signs of a weak market ahead.
For the past few months, there have been some catalysts that have depressed commodity prices. The number one reason has been the rally in the dollar caused by Italian elections, Cyprus’ banking issues, strong U.S. economics, and anticipation of Japanese easing monetary policy.
Earlier in the month I suggested that we would likely hit a soft patch in Q2 and projected that the markets would remain weak through most of May. However, given the risk of recession remains a remote possibility, any pullback in the markets would serve as a buying opportunity. I believe the U.S. economy is still on a growth trajectory and if an economically weak Europe can re-energize in the second half, then the markets should head higher with cyclical sectors leading the charge.
Has the "shale revolution" changed the outlook for Peak Oil? Dr. Robert Hirsch shares his insights from a conference in the Middle East where leaders there are now starting to consider what happens when we reach the peak.
The technical picture of the market is as weak as it has been in many weeks. The percentage of stocks that are in good shape technically fell sharply last week. There was a 10% decrease in stocks that are in either basing or advancing patterns on the S&P 500, falling down to 74%. Things are worse in the small cap land.
One of the concerns of late is the weakness in commodities and what that portends in terms of global growth going forward. Many argue that the slide in commodity prices is discounting a collapse in global growth in the near future.
At a time when the Federal Reserve Bank has been debating how to end QE, recent developments in the economy have shown a deceleration in activity that has also transmitted into lower commodity prices. Stocks have been extended for some time, but have recently pulled back to support; while internally, many sectors have already exhibited sizeable corrections since February and March.
In this exclusive interview, previous high frequency trader turned whistleblower, Dave Lauer, discusses the ins-and-outs of HFT on Financial Sense Newshour, including how it is used to takedown stocks through naked short selling, the conflicts of interest with regulators, exchanges, and large firms, and numerous other issues now facing investors in our brave new world of electronic trading.
As highlighted in a previous article, while the economy is on solid footing with little chance of a recession on the near horizon, there were some warning signs that we could be due for a soft patch in Q2.
While gold and silver bullion have fallen considerably since the highs reached in 2011, and mining stocks have fallen even more, I believe the weakness behind much of this move is due to the transition from the bull market in precious metals to its next phase.