Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19
More Stock Market Weakness Ahead - 12th Aug 19
Global Central Banks Move To Keep The Party Rolling Onward - 12th Aug 19
All Eyes On Copper - 12th Aug 19
History of Yield Curve Inversions and Gold - 12th Aug 19
Precious Metals Soar on Falling Yields, Currency Turmoil - 12th Aug 19
Why GraphQL? The Benefits Explained - 12th Aug 19
Is the Stock Market Making a V-shaped Recovery? - 11th Aug 19
Precious Metals and Stocks VIX Are About To Pull A “Crazy Ivan” - 11th Aug 19
Social Media Civil War - 11th Aug 19
Gold and the Bond Yield Continuum - 11th Aug 19
Traders: Which Markets Should You Trade? - 11th Aug 19
US Corporate Debt Is at Risk of a Flash Crash - 10th Aug 19
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly - 10th Aug 19
Market’s flight-to-safety: Should You Buy Stocks Now? - 10th Aug 19
The Cold, Hard Math Tells Netflix Stock Could Crash 70% - 10th Aug 19
Our Custom Index Charts Suggest Stock Markets Are In For A Wild Ride - 9th Aug 19
Bitcoin Price Triggers Ahead - 9th Aug 19
Walmart Is Coming for Amazon - 9th Aug 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Stock Market - Is It 1999 All Over Again?

Stock-Markets / Stock Markets 2014 Jul 18, 2014 - 06:53 PM GMT

By: Clif_Droke

Stock-Markets

The ebullient mood on Wall Street today was stimulated by a rash of merger and acquisition announcements.

Consider the following: In the energy sector, Kodiak Oil & Gas (KOG) agreed to be acquired by Whiting Petroleum (WLL), resulting in a sizable jump for both stocks. Among industrials, URS Corp. (URS) agreed to be acquired by Aecom (ACM), leading to 10-12% leaps for both stocks. Among health care companies, Shire Pharmaceuticals (SPHG) was reported to have accepted a $53 billion takeover bid AbbVie (ABBV); also, Mylan (MYL) announced a $5.3 billion deal to purchase a segment of Abbot (ABT).


If you get the feeling that M&A is becoming bubbly, you'd be right. According to the Business Insider web site, the first quarter of 2014 witnessed the largest aggregate deal value since 2007 and the largest average deal size since 2007 (see chart below). In the second quarter alone, there were three U.S. merger proposals worth at least $40 billion, says MergerMarket's M&A Trend Report: Q1 2014.

Q1 Average Deal Size

Zacks, meanwhile, points out that M&A activity hit a 7-year peak as of June 26 with consolidate deal values increasing 75% year over year to $1.75 trillion. While it's true that the return of "merger mania" often marks the terminal phase of a bull market, it would appear that this particular M&A boom still has some room to run before topping out. Due to the enormous levels of cash on corporate balance sheets in recent years, not to mention record low interest rates and favorable credit markets, the M&A trend has had lots of fuel behind it.

So while the M&A trend is definitely building momentum, it hasn't yet turned into the dangerous "merger mania" episode of the 1990s. Mergers and acquisitions are symptomatic of the greed (or "irrational exuberance" as Alan Greenspan put it) which accompanies the late stages of a bull market. At some point, however, the trend will run to an extreme - just as it did in the late '90s - and will evoke its own reversal as per the "Rule of Alternation."

While we're on the subject of irrational exuberance, another newsworthy item came to our attention today which reminded us of the late '90s. Remember the Internet stock craze and the often ridiculous valuations (or lack thereof) behind many Internet startups of those days? Well it would appear that the bromide "history repeats" is playing out once again. A company operating under the name of Cynk Technology Corp (CYNK), which markets itself as a social network firm, is headquartered in Belize and has just one employee. Moreover, the company has no reported revenue and zero assets, yet its stock price has rallied 25,000% since June is now worth $6 billion as of last week.

Comenting on CYNK, options strategist Jacob Mintz of Cabot Options Trader said: "It appears to be a case of 'pump and dump' gone haywire. The SEC finally stepped in on Friday [Jul. 11] and halted trading of the stock due to concerns about "the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in CYNK common stock." Could the stock symbol for this company turn out to be a prescient, yet ironic, commentary on the company's future?

Although the Dow Jones Industrial Average (DJIA) and NASDAQ 100 (NDX) remain above their rising 30-day and 60-day moving averages as of Thursday, July 17, there are a couple of negative signs among the major indices. One such area of weakness is the small cap stocks. The Russell 2000 Small Cap Index (RUT) has recently made a negative divergence when compared with the other major indices. As of Thursday, RUT has even violated its 60-day moving average in a sign of major weakness. We'll need to closely monitor the RUT in the coming days since persistent weakness in the small cap stocks could eventually spill over into the broad market.

RUT Daily Chart

The S&P 400 Midcap Index (MID), an important leading indicator for the S&P 500, has also violated the 30-day MA and is about to test its 60-day MA. A decisive violation of this important trend line could set the stage for a "summer swoon" for the broad market. See the following chart.

MID Daily Chart

New Concepts in Support & Resistance

Back by popular demand, the classic text on support and resistance techniques for predicting tops and bottoms in stocks and commodities is back. The book New Concepts in Support & Resistance integrates classical approaches of support and resistance analysis with new and exciting discoveries of stock and commodity price chart analysis.

Starting with some original observations and discoveries of the pastmasters R.W. Schabacker, Edward & Magee, W.D. Gann, and P.Q. Wall, New Concepts in Support & Resistance includes the added dimension of my own discoveries of this extremely important technical concept. Also included is an in-depth and detailed discussion of Parabolic Analysis and how to do it for maximum profits in your trading.

Support and resistance analysis is probably the single most important, yet widely overlooked, trading strategy components. This book explains to you in easy-to-understand terms all you need to know about it. The book is now available for sale at: http://www.clifdroke.com/books/newconcepts.mgi

Order today to receive your autographed copy along with a free booklet on the best strategies for momentum trading. Also receive a FREE 1-month trial subscription to the Gold & Silver Stock Report newsletter.

By Clif Droke

www.clifdroke.com

Clif Droke is the editor of the daily Gold & Silver Stock Report. Published daily since 2002, the report provides forecasts and analysis of the leading gold, silver, uranium and energy stocks from a short-term technical standpoint. He is also the author of numerous books, including 'How to Read Chart Patterns for Greater Profits.' For more information visit www.clifdroke.com

Clif Droke Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules