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Blame the IMF

Published Monday, April 14th, 2014

It is ironic that in a week in which Greece successfully returned to the bond markets and US consumer confidence reached a 9-month high that stock markets took a big hit. It should have been a strong week after US non-farm payrolls came in just below 200,000. Perhaps it is simply a case of the old financial adage coming into play that when everyone is converted it is time to change direction.

Technology stocks struggled all week. On Thursday the Nasdaq had its worst session since November 2011 and the biotech sector is down 21% from its all-time high achieved only a few weeks ago at the end of February. Warnings of overvaluations have been rife but as always when the mood changes it is unexpected, brutal and without obvious cause.

The Fed minutes had appeared to calm fears of an interest rate rise in the Spring of 2015 but it was a false lead. The IPO gang have been too greedy pushing out too many new stocks at outrageous valuations based on little more than hope and optimistic extrapolations. The pile became too heavy and has begun to topple but has not as yet collapsed. A poor 1Q results season could produce the final push and it has not begun auspiciously.

To read the rest of the report, please click here 

Posted by David Hufton