Welcome to CrushTheStreet.com’s Weekly Market Wrapup!
Let’s begin in the U.S. equities sector, which again ran flat heading into the final stretch of the week, despite an earnings blitz that featured several top names, including Apple and Facebook. The benchmark S&P 500 closed a hair above 1,878 points, a two-tenths of a percent move, while the Dow Jones Industrial Average ended at parity against the prior session, closing at 16,502. The leader of the major indices was the NASDAQ, which started the day strong, moving up over a percent before halving those gains, eventually closing at 4,184 points.
Positive results from Apple, which recently announced a 7-for-1 stock split, did little to affect the trajectory of the broader markets, with the Ukrainian crisis on the verge of another violent escalation. Belligerent statements by Russian president, Vladimir Putin, in which he blatantly accused the internet of being a CIA project despite Russia’s own expansion of domestic surveillance networks, according to Andrei Soldatov, an expert on Russian surveillance culture, did little to mitigate geopolitical tensions, with the cryptic nature of his statement sending shares of Yandex, the Russian equivalent of Google, to a 5-and-a-half percent loss. In turn, both gold and silver turned up in the middle of the week, buoyed by anticipation of further unrest, while palladium regained the $800 dollar mark.
Putin’s statements on potential Russian spying in reply to Edward Snowden: Link to Article
Forward Momentum or Heading Towards Sizeable Correction?
Domestically, industry participants are steadily absorbing the reality that year-to-date, the equities sector has done little more than to secure a footnote in the annals of stock market history. Now, the million dollar question is whether this is enough to move momentum forward or if we are headed towards a sizeable correction.
CNBC contributor Michael Santoli wrote an op-ed earlier this week comparing the similarities between market dynamics in 2014 versus the tape of 2005. In particular, he noted that large-cap equity indices absorbed hefty gains following a bounce from the bursting of the internet bubble, and 2005 was marked by indecisiveness.
Further expounding matters was Google’s astronomic rise of over 400% against its IPO, which occurred only a few short months ago in August of 2004. This led “The Economist” to headline an article entitled, “The Echo of a Boom?,” which mirrors bearish sentiment currently expressed by alternative media sources and select offerings from the mainstream.
But the similarities don’t end at mere conjecture : by Memorial Day weekend in 2005, overheated tech stocks fell by as much as 12% while the broad market remained relatively stable. So far this year, the tech-centered NASDAQ is the clear laggard amongst the major indices, with its fortunes changing abruptly in the first week of March. Tellingly, its chart pattern is dramatically different from the S&P or the Dow, displaying what could be described as an aggressive broadening wedge, a rare formation recognized by technical analysts as having substantially bearish implications.
Another parallel is the action taken by the Federal Reserve. In 2005, the Fed was reigning in easy-money stimulus that it had administered following the market breakdown near the turn of the century. Then chairman Alan Greenspan signaled his intent to retire, leaving Ben Bernanke to carefully oversee the rate-lifting process. The connection with Bernanke’s decision to exit front and center after negotiating the wake of the 2008 crisis is perhaps more than coincidental.
And that will do it for this edition. Thanks for watching, and we’ll see you next week!