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Four Days Ago the Sky Was Falling

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The bulls (or perhaps more accurately, the bull algos) put on quite a show again on Tuesday. For the fourth day in a row, stocks rocketed higher and the S&P 500 finished with the best one-day gain in more than a year. Not bad for a market that had been left for dead four days ago, right?
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Second Strong Session For The Week

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MARKET SUMMARY

- Stocks continue rally with NASDAQ, SOX taking the lead while RUTX takes a deserved breather.
- RUTX, SP400, NASDAQ, SOX, SP500 all post follow through sessions.
- Oh NOW they say the market has bottomed.
- Six days into the move, stocks moving well.  Let positions run, take some gain, anticipate the pullback to test.
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Time to Buy The Dip?

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Sometimes it can be advantageous to step back from the blinking screens and the wild intraday swings in order to try and get a feel for the bigger picture. On that note, there can be little argument that the U.S. stock market has undergone a corrective phase since what is now referred to as the “Alibaba top” (NASDAQ: BABA) seen on September 19. The question now, of course, is if the correction is over or if the bears are just resting while the bulls put in a few frenetic days of upside action.
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Steady Move From Open to Close

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MARKET SUMMARY

- Stocks overcome adversity, pull a low to high move, just lack volume.
- IBM commits heresy, truncates buy back, investors truncate its move.
- Growth leads again, rally resumes, but not many believe in it.
- ECB starts its asset buys, Japan’s pension fund doubling up on stocks, Nigeria Ebola-free.
- China debt to GDP to surge astronomically.
- Small caps rally but no follow through.  SP500 still on its relief bounce.

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Critical Juncture for the Market Bounce

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MARKET SUMMARY
- Large caps finally show some life, but after such tough selling, still less than impressive.
- Small caps take a breather, SOX and SP400 a bit problematic.
- Smaller biotechs have a tough Friday after a good week.
- Economic data bad and good on the week, but good outweighs.
- ECB ready to buy assets . . . any day now . . . really.
- Yellen ‘greatly concerned’ about economic inequality.
- Short interest diving, bullish sentiment down 20 points from September.
- Critical juncture for the market bounce.

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Is This a Dead Cat Bounce?

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Thursday was yet another wild ride on Wall Street. While the intraday swings paled in comparison to Wednesday’s insanity, there was still plenty of volatility to go around. With the algos clearly still in charge of the action, it is somewhat difficult to make heads or tails of it all. But let’s give it a go anyway.
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Another Selloff, Another Recovery

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MARKET SUMMARY

- World issues overwhelm decent economic news.  Stocks sell, stocks again recover.
- Industrial production, Capacity, jobless claims, Philly all top expectations.
- Ebola continues to upgrade economic worries as Europe continues its fall.
- GOOG earnings somewhat disappointing.
- Small caps sport some very good move as breadth jumps.
- Watching for follow through from the early leading indices, watching for SP500, NASDAQ to get it together.

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The Economy is Now a Worry

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As of Tuesday afternoon, the stock market was struggling with “The Five E’s”. Traders were fretting about the potential impact of Ebola, Europe’s sinking economy, the big dive in energy, the status of various monetary easing efforts by central bankers around the world, and what the outlook for the coming earnings season might be.
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Small Caps Lead Back Upside

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MARKET SUMMARY

- So much for INTC’s earnings. Stocks open lower, bomb.  Then recover.
- Small caps lead back upside.  Surprise.
- Large caps bounce but their patterns are horrid.
- Retail sales stink, New York PMI moves from first to worst.
- Big move down and up, but most scoff at the notion of a major bottom.
- Took gain on the downside as stocks sold, starting picking up upside as stocks recovered, started to trade a bounce.

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Identifying the Drivers of Stock Market

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Identifying the drivers of stock market action can be helpful in determining when a move is overdone and due to reverse. For example, the various wannabe crises that have cropped up over the past two years have all fizzled out in short order as investors realized there was nothing major to worry about. As a result, the dips have been bought on a consistent basis.
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Stocks Again Try The Upside

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MARKET SUMMARY

- Stocks open higher, avoid the downside flush out, rally, but then manage to give up the move.
- Good move? Bad move?
- Some nice moves hang on, most don’t, some nice patterns in good names look ready to bounce.
- The market can deliver upside from here though likely nowhere near new highs.

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Worried About the Break of the 200-Day?

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For much of Monday, the S&P 500 traded in a relatively narrow range with the market appearing to be searching for direction. After a decline of more than 5% over the past few weeks, most traders were looking for a bounce. After all, every single time the market had “dipped” over the past three years, buyers had emerged and before long, the market had always wound up bounding to new all-time highs.
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Upside Did Not Take

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MARKET SUMMARY

- Buyers test the waters, get washed away again with late selling.
- Rumors rampant in the afternoon, blamed for the selling.
- RUTX showing signs it is sold out as the large caps again catch down to RUTX’ early losses.
- A/D flattening out, many nice looking smaller caps continue to hold good patterns.

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Perhaps More Selling to Set a Rebound

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MARKET SUMMARY
- When the chips are down . . . Semiconductors prove they are leaders yet again.
- SOX smashes support, DJ30 undercuts 200 day SMA, but SP500 holds that key level, CAT shows a doji at the 78% Fibonacci retracement.
- Biotechs and bonds: biotechnology holds up well, bond funds receive record inflows.
- Cramer: “just go own Kroger.”  That should be good enough for a bounce.
- Perhaps more selling to set a rebound, but even then the market will need more leadership than just the biotechs.

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Risk Levels Are Elevated

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Wow, what a week/month it has been so far. Students of the market know that October has a reputation for increased volatility. And cutting to the chase, this October is certainly living up to that reputation as we’ve seen wild swings in the major indices each and every day this month.
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Stocks Did Attempt a Low to High Move

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MARKET SUMMARY

- Fed-induced rally has a meteor’s half-life as jawboning about rates can’t fool all of the investors all of the time.
- Midcaps, DJ30 break recent lows as indices cough up gains, head to the next lower support.
- AAPL: Icahn says buy back more shares, pump up stock price . . . what happened to the leading tech company investing in the business?  The new economy happened.
- Riding the downside even as some areas continue to hold up, eye buys.

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Stocks Run Higher After Fed Alters Outlook

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Until yesterday, traders worried that the Fed might increase rates sooner than expected. Until yesterday, traders were concerned that the recent good economic news might wind up being bad news for the stock market. And until yesterday, traders fretted that the Fed might make a mistake.
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Panic Buying Grips Market

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MARKET SUMMARY

- Stocks start to sell again and then FOMC minutes assist a tremendous surge back upside.
- Shorts stampede to buy to cover, others stampede to buy to not miss out as panic buying grips the market.
- We said to watch for a RUTX false breakdown, but really didn’t expect it to take . . .
- Many believe Wednesday was a bear market bounce and will unravel at SP500 1980ish.  The more that think so, the less likely.

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Is It Really Different This Time?

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Yesterday’s trash-job in the stock market has bearish analysts telling anyone and everyone who will listen that this time it’s different. This time, the bounce and the expected “V” bottom failed, we’re told. This time, the technical damage is just too great. This time, there are huge divergences and narrow leadership. This time, global growth matters. And in sum, this time, the dip buyers aren’t coming to save the day.
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A Bit Further To Next Support

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MARKET SUMMARY

- The upside gives up for now as the large cap indices test last week’s lows, smaller caps, SOX delve to lower lows.
- Earnings warnings, EU economic issues, IMF world growth cut blamed for stocks selling, but they were set to make the move lower.
- JOLTS show job openings, no hires.
- A bit further to next support.

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Not a Good Start of the Week for the Upside

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MARKET SUMMARY

- Stocks attempt to continue the rally, do a poor job of it.
- Light news day: HPQ splits in two, some M&A, EU economic data continues to sag.
- Buybacks shockingly account for companies’ largest expenditures.  But when that is their main form of ‘investment,’ is it all that shocking?
- Indices look ready to roll over at resistance.  Up to SP500, DJ30 to hold the line.

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Low Paying Jobs Heralded in ‘Jobs Recovery’

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MARKET SUMMARY
- Stocks continue the Thursday rebound as Jobs Report touches the right buttons.
- Large cap NYSE indices post nice gains, growth indices rally but patterns lag.
- Low paying jobs heralded in ‘jobs recovery’ that shows 4 of 5 jobs in the Wal-Mart greeter category.
- Drugs, Healthcare still outperforming in a rather defensive tone.
- New month for the month has taken its shot.  Now we see if there is any left and if sellers take their shot.

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Another Dip-Buying Opportunity?

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The volatility continued on Thursday as investors were treated to a yet another in what has been a string of wild rides. For example, the futures had pointed to a modest rebound at the open of trade on Wall Street yesterday. However, within an hour, the Dow was down triple digits, the S&P was breaking down badly and it looked like the full-fledged correction that everyone has been talking about/waiting for was on.
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Market Technically Ready to Bounce

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MARKET SUMMARY
- Stocks sell further, hit the bounce point, bounced back.
- Short covering after a big selloff, before the Jobs Report, snowballs upside.
- Market technically ready to bounce, doing so, but the selling is not likely over.

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What Do The Cycles Say Now?

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The markets turned ugly on Wednesday as traders ushered in the new quarter with a steady stream of selling. The S&P 500 fell -1.32 percent while the embattled Russell 200 once again led the way lower by dropping -1.42 percent. It is also worth noting that the smallcap index closed at a new low for calendar year 2014 and is now down -6.72 percent for the year.
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Tumultuous Session, Down From the Start

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MARKET SUMMARY
- Stocks start slightly lower, end a lot lower.
- Major breaks on all indices.
- ADP beats.  There was much rejoicing.
- ISM misses, still well over 50, doesn’t really matter given the adjustments of opinions.
- Sentiment:  Tepper still bullish so no bottom yet.
- Riding it lower, watching for what support holds, starts a new move

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Make a Market Call? Never!

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I was recently taken to task on Seeking Alpha for providing a “daily dump” of information (this was likely a play on the title of my morning missive, “Daily State of the Markets”) and for failing to provide specific guidance on (a) what the reader should do and (b) what I believe will happen next. This individual is obviously not a fan of my work, and frankly, I can respect that. What I do is definitely not for everyone.
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Squandering Opportunity To Rally

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MARKET SUMMARY

- Stocks change pace, start higher but new habits linger and they finish lower.
- Large caps hanging on again as small caps and midcaps break lower.
- Holding the line but squandering every opportunity to rally.  Now there is Ebola to contend with.

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Traders Have Seen This Before

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Twice in the last two days, it looked like the bears were finally going to break through. Twice in the last two days, the S&P 500 teetered on the edge. Twice in the last two days, the market came roaring back. And twice in the last two days, the bears went home disappointed.
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Swallow the Pride Even if it Chokes You Going Down

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MARKET SUMMARY

- Geopolitical events trump local stories and stocks start down hard.  But, they hold support and recover.  Again.
- Hong Kong protests Chinese election crackdown, Catalonia wants to vote for independence.  Wow, talk about heading in two different directions.
- M&A activity still alive and well.
- Ford sees European problem.
- Buyers step in when things look bad.  Some positives for a near term bounce.  If there is no quick drop.
- Swallow the pride even if it chokes you going down.  And make some money as well.

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Stocks Oversold Heading to Earnings

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MARKET SUMMARY
- Indexes bounce from the next lower support.
- Internals weaker but trying to set up an oversold bounce.
- GDP revised to 4.6%.  Never have so few not worked for supposedly so much.
- Stocks oversold heading to earnings providing an opportunity and reason to recover some lost ground.

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Is This THE Correction?

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Wait, what? On Wednesday, stocks blasted higher on the back of Super Mario singing a dovish song, word that China was about to sack the head of its central bank in favor of someone more modern, and not one, not two, but three Fed Governors suggesting that the Fed would likely take their time when it comes to raising rates.
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Old-Fashioned Butt Kicking for Stocks

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MARKET SUMMARY

- Stocks thrashed, SP500 and NASDAQ break 50 day MA, smaller caps hold support.
- Dollar moves to a 14 year high.
- Some ugly moves, but a lot of stocks ignore the selling, making it difficult to wholly give up on the upside.

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Still Playing the Upside

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MARKET SUMMARY

- A bit further test and then indices then bounce.
- Some strong moves by leaders, others just bounce from hard selling.
- Surprise.  Sentiment much higher at the highest income levels.
- Still playing the upside as a bounce likely to turn back over.

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Smaller Caps Once Again Bearing the Brunt

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MARKET SUMMARY

- Stocks start soft again, then sell off harder.
- SOX, NASDAQ sport nice tests to the 50 day EMA.
- RUTX and SP400 dive again, with Russell now posting the ‘death cross.’
- US slams the door, initiating a new form of capital controls using the tax law, the purview of the Congress.
- NASDAQ, SOX, SP500 may try a bounce, but a bounce here we believe leads to more selling ahead.

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Are There Sector Divergences Too?

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Last time, we looked at the “technical divergences” evident in the current market from a big-picture standpoint. We compared the charts of the Dow, S&P, NASDAQ, Russell 2000, and S&P 400 Midcap in order to see if the major indices were all singing the same song. We noted that in a strong market, “the generals” tend to lead the market and “the troops” follow along.
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Expiration Selling Does Not Dissipate

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MARKET SUMMARY

- Friday selling doesn’t dissipate and market shows follow through, to the downside.
- Small caps and midcaps crash support while large caps and SOX hold trends.  Down, but hold trends.
- Many leaders simply testing, but some big names are breaking down.
- August existing home sales negative, miss positive expectations.

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Worried About Technical Divergences?

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There has been an awful lot of discussion lately about the existence of “technical divergences” in the current market. In English, a “divergence” occurs on the charts when the major indices and/or sectors are not all dancing to the beat of the same drum. In short, in a strong market, “the generals” (the Dow Jones Industrial Average, S&P 500, and NASDAQ) tend to lead the market and “the troops” (the Midcaps and Smallcaps) follow along.
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All is Well Economically Right?

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MARKET SUMMARY
- Expiration jolts some indices and stocks.  Was it just an expiration thing?
- Some big names look a bit toppish, others look fine as the indices broke higher last week.
- All is well economically right?  Don’t look at incomes or capital investment.
- Still leaders performing well, setting up even as some look weary.

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What These Two Indicators Are Saying

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With the Fed meeting finally out of the way, traders can now turn their attention to other things happening in the markets such as rising interest rates, the wild action in the currency markets (if you haven’t seen it recently, be sure to check out symbol UUP – PowerShares U.S. Dollar Index), the question of where commodities are going, China’s stimulus plans, that hot new IPO, the ongoing geopolitical issues, and of course the fundamentals of the stock market.
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Stocks Appeared to Warm to Fed’s Statement

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MARKET SUMMARY

- Market warms up to the FOMC ‘CT’ phrase.
- DJ30, SP500, SOX hit new highs, but NASDAQ, RUTX look wobbly.
- Housing starts turn rather sharply negative.
- Some very good market leadership as other buyers enter and push our positions, taken when times were a bit murkier, upside.

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Milk, Ground Beef Hit New All-Time Highs

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MARKET SUMMARY
- Fed keeps a ‘considerable time’ on the burner, stocks up, down, flat.
- CPI drops as milk, ground beef hit new all-time highs.
- Chips are still leaders, along with many other stocks, but rapid rotation continues.

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PPI Lowest of 2014

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MARKET SUMMARY
- Stocks turn from a weak open to gains with DJ30, SOX leading.
- Hilsenrath credited with helping market higher as the Fed’s ‘ear’ says Fed will reiterate low rates for the longer term.
- Buybacks impressive for the year, no doubt helping keep the market higher.
- PPI lowest of 2014.
- Not everything turned upside as the market remains split, unable to move up together.

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A Tale of Two Markets

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MARKET SUMMARY

- Futures head fake as pre-market moves reversed at the open.
- SP500, DJ30 hold up fine, growth sells hard.
- Selling blamed on Alibaba IPO prep and pre-FOMC jitters.  Whatever the reason, growth sold instead of bouncing.
- NY PMI jumps after biggest decline in 2 years even as employment and the workweek fade further, new orders flat.
- Industrial production and capacity fall sharply.  More accurate than adjusted sentiment?
- China: Even more very worrisome economic data.
- The next break was lower from the consolidation.  Again, will there be follow through?

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What the Fed is Betting On

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The big focus in the market last week revolved around the possibility that Janet Yellen and her merry band of central bankers may need to change their tune at this week’s FOMC meeting. More specifically, the issue is if there will be tweaks to the Fed’s forward guidance language, with most of the concern focused on the likelihood that the FOMC may drop the phrase “considerable time” from its post-meeting statement.
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Leaders Still Setting Up But Some are Lagging

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MARKET SUMMARY
- Stocks slide back into a holding pattern as Thursday’s growth advance is flipped.
- Retail sales solid on autos, higher costs.
- China economic data shows a massive slowdown.
- Leaders still setting up but some are lagging.
- At this time of year a failure to launch when the opportunity is there can lead to trouble.

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The Fed is Gambling Again

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There can be little argument that the U.S. Federal Reserve saved the banking system and in the process, the global economy, during the credit crisis. In an intense time with the financial system seemingly coming apart at the seams, Bernanke & Co. pulled out all the stops in order to keep the country from an abject disaster.
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Decent Recovery Led By the Small Caps

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MARKET SUMMARY

- Struggle to start on 9-11 after inspiring Presidential airstrike promise, but a decent recovery led by the small caps.
- Jobless claims jump but nothing major, nothing like the Ebola cases.
- Oil to a 2.5 year low in demand, so it was time to bounce.
- Nice leadership even if big biotech struggles.
- RUTX puts in a nice upside break, SP400 as well.  Large caps trying.
- Critical time ahead as stocks set to bounce but have to watch out for seasonal dips.
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Trying To Rally Again

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MARKET SUMMARY- Stocks hold the bottom of the range, bounce with NASDAQ in the lead.  And AAPL.  And Scotland.
- Key groups lead, helping bounce indices off support.  Key groups lag, holding indices in the range.
- Wholesale inventories in three month decline, weakening a GDP built mostly on inventories.
- Japan joins Europe in the negative interest rate policy, unintentionally of course.
- Trying to rally again, some good moves, but nothing decided yet.

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Indices Still Holding the Recent Ranges

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MARKET SUMMARY

- No breakout as the indices stall and fall to the bottom of the range.
- Selling has a bit more teeth, but indices still holding the recent ranges.
- Japan conducts another lesson in classic economics.
- Gallup survey continues its divergence from the government consumer sentiment polls.
- Seen this headline before: “Why this market will never go down.”  Should be subtitled ” . . . until it does.”

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