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FOMC Strikes the Hawkish Pose

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MARKET SUMMARY
- Stocks struggle all session, try to rally on the FOMC minutes but cannot hold the move.
- Breakout sputters, but could just be pre-expiration gyrations.
- FOMC strikes the hawkish pose with some very interesting commentary.
- Yellen ponders Greenspan conundrum: why don’t long bond rates rise?
- Fed not worried about non-domestic economies.  Good thing given China just suffered the largest steel bankruptcy yet.
- Some serious breakdowns are cropping up as small caps test further but do manage to hold some near support.
- We will see if this was just an expiration thing.
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Market Has Bears Baffled

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The major indices stepped lively to a fresh set of new highs yesterday with the Dow, S&P 500 and NASDAQ 100 all finishing at their highest levels ever. However, as has been the case for much of the year, the smallcaps, midcaps, and microcaps failed to confirm. And while this situation could be rectified should stocks continue to run in the near-term, the divergence between the generals and the troops remains an issue.
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Small Caps Still Lagging

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MARKET SUMMARY
- Slow lateral move yields a breakout.
- Small caps still lagging.
- A lot more news items: Japan, earnings, buybacks, PPI core jumps but inflation expectations low, stocks at highs and so are homeless kids.
- Making the new break upside with the large caps again in the lead.
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Bears Came Up Empty Handed Again

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Perhaps the biggest surprise of the day Monday wasn’t the fact that Japan suddenly finds itself back in a recession. Nor the fact that the Bank of England’s Mark Carney began to publicly fret about deflation. Or that Super Mario started talking about QE again. Or even that David Cameron said that “red warning lights are flashing” in the global economy again.
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Japan Economy Triple Dips

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MARKET SUMMARY
- It was more of the same with a twist: indices flat line but the small caps break near support, many patterns that were great Friday hit with selling.
- Perhaps just rotation from small cap groups, but they are an important group for the rally and they were getting hit.
- Japan economy triple dips, but let’s face it, its depression continues.
- M&A keep the ‘new normal’ capital investment alive and well.
- New York PMI rises but misses, positive outlook, terrible hours worked.
- Industrial production and capacity fade after good showings.
- China cutting taxes to increase economic activity.  Communists acting more American than the US.

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A NEW Diversification Approach

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A self-proclaimed investing “newbie” expressed appreciation for Friday’s missive and the introduction of some long-term indicators that can indeed help just about anyone “time” the market successfully. This particular reader decided to start following the “golden cross” in an effort to be better prepared the next time the bears come out of hibernation.
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Russia is a Real Potential Market Problem

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MARKET SUMMARY
- More of the same with large cap NYSE testing while NASDAQ gains and SOX bounces.
- Excellent leadership action continues.
- Seasonal pattern is holding pat, but there Russia is a real potential market problem.

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One of the Greatest Myths in Investing

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A colleague who writes for a national financial website recently sent me a note asking for a couple words on one of “the greatest myths in investing.” So, I felt like I needed to respond. Never mind that I had been traveling all week and was nearly brain dead when I saw the email. I grabbed a Diet Coke, slammed it down and put on my thinking cap.
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RUTX Needs To Hold And Bounce

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MARKET SUMMARY

- RUTX disappoints, giving back the Wednesday move.  SP500, DJ30 continue slowing.
- Lots of crazy stories, but the Russian story is one of the more worrisome coming back into the headlines.
- If the rotation theory is going to hold, RUTX needs to hold and bounce.
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Year End Run Working

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MARKET SUMMARY

- SP500, DJ30 stall for the day while RUTX, NASDAQ post decent upside.
- BOE, EU inflation comments, data slow US action.
- Big indices slowing to test, growth making its move upside, all pretty much as expected.
- Year end run working, but it won’t be all upside.

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Stocks Add to Gains, Barely

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MARKET SUMMARY

- Further move higher but not a lot of strength on any index.
- Still good strong breaks higher on volume despite the indices.
- Not much news, but what is out there is amusing.

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Stocks Picked Up Where They Left Off Last Week

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MARKET SUMMARY

- Stocks continue their climb, extending the four week run.
- Small caps step up nicely, break higher from the consolidation, try their hand at leading again.
- Lower gasoline prices provide more disposable income. Heaven knows wages are not.
- Low volume moves but solid breaks form smaller caps moving upside.

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Jobs Report Misses, Viewed as Still Solid

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MARKET SUMMARY
- Cognitive dissonance continues with the October jobs report.
- Stocks jump on the jobs report, then don’t.
- Younger age worker demographic throws in the towel, joins seniors in taking low-pay jobs.
- Just as likely to meet a waiter as a manufacturing worker.
- SP500, DJ30 appear a bit extended as NASDAQ, RUTX set up to move up as the large caps rest.

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Reasons To Stay Bullish

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A month ago, the sky was falling. The technical divergences seen in the market were coming home to roost. Growth was slowing. Indicators were falling. Moving averages were snapping. There was fear in the air. And for the first time in a very long time, it looked like the bears might actually be awakening from an extra-long hibernation.
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Stocks Moved Higher Away

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MARKET SUMMARY

- A Dukakis day, kind of boring, kind of bland.  Stocks moved higher anyway.
- Jobs Friday, but not to worry, the fix is in.
- Still have to look upside when the individual stocks show their moves.
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Market Showing Odd Behavior

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Although the S&P 500 and Dow Jones Industrial Average indices enjoyed pretty good gains Wednesday and finished at fresh all-time highs, the rest of the major indices failed to join the party. And the NASDAQ, NASDAQ 100, and Microcap indexes actually finished lower.
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Commodities Having Issues

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MARKET SUMMARY

- Stocks surge on election results, not all indices hold the move, but all are still in good shape.
- Biotechs struggle as money prepares to move elsewhere.
- Commodities having issues.
- ‘Pat’ scenario holds as indices continue to hold, set up.

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Uncertainty Could Be Creeping In

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It’s been quite a roller coaster ride on Wall Street lately. Since the dog days of July (7/24/14 to be exact) the S&P 500 has been on a wild ride. In a period of just a little more than three months, the venerable stock market index has experienced a pullback of -4.35 percent, a rally of +5.74 percent, a scary decline of -9.84 percent, and a stampede to the upside which totaled +11.2 percent (so far) from the intraday low of October 15.
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Likely More Testing To Come

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MARKET SUMMARY

- Indices test and rest, recover from deeper losses.
- Leaders start moving up already but likely more overall testing needed.
- European Commission downgrades EU economic forecast for 2014 and 2015.
- Ford sales drop, Maserati sales surge
- Oil continues its decline.
- Likely more testing to come but many leaders still look solid and are already starting to move.
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Can the Upside Move Continue?

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With the S&P 500 having blasted up +10.9 percent in just 12 days, it is safe to say that the bulls have displayed a little “oomph” in their latest joyride to the upside. And to students of the game, it is the “oomph” behind the move that is really the key.
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Stocks Were Mixed But Hardly Lower Overall

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MARKET SUMMARY

- Stocks winded after end of month run, no new money comes in to help.
- Economic data is very good and very bad.
- Dallas Fed chief critical of QE3
- M&A continues as capital investment
- First-time home buyers hit 27 year low.
- Despite all, stocks still rising, and after some new money and a test, the year end run scenario is still in play.

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The Dance With QE Continues

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It appears that the dance with QE will continue today. For anyone invested in stocks, this has been a beautiful dance to watch for several years now. It’s a bit of a two-step and here’s how it works. First, the markets fret over what appears to be economic weakness. This causes stocks to move lower and everybody frets about the global economy slipping back into recession. But then the Fed, the Bank of Japan, the Bank of England, the European Central Bank, and/or the People’s Bank of China starts talking about printing money and/or taking steps to stimulate economic growth. Bam, the problem is solved and everybody is dancing again.
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A Little QE And You Get New Highs

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MARKET SUMMARY
- A little QE, even from Japan, and you get new highs.
- Improbable, but market plays the ‘pat’ scenario, selling in September and October, then turning and rallying right back up.
- Spending lower to start Q4 after Q3 showed declining consumption already.
- New month and perhaps some new money to drive stocks a bit more before a test of the breaks higher.

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The Market Today is All About QE

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As someone who entered the investing business in 1980, it is very odd to see the central bankers of the world now focused on trying to increase inflation. Back in the day, inflation was the enemy. An enemy Paul Volcker was locked in battle with for years as runaway inflation threatened the very core of the U.S. economy after the oil shocks in the 1970′s.
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Stocks Were Lower But Found Support

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MARKET SUMMARY
- Stocks start soft, rally, continue the low to high bias.
- Q3 GDP beats thanks to government spending as consumer, business spending is light.
- Jobless claims at 40 year lows.  Surely this is the best jobs market in 40 years.
- V leads DJ30 higher, eventually the rest of the market follows, except for SOX.
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Hawkish Or Just Plain Pragmatic?

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As expected, Janet Yellen’s Fed announced yesterday that their QE bond-buying program was coming to an end. The move was widely telegraphed and could be viewed as a positive since the Fed no longer thinks the economy is weak enough to require the Fed’s help.
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Nothing to Fear But…

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The bulls put a bit of an exclamation point on what is turning out to be a real joyride to the upside higher yesterday as the S&P 500 once again rallied hard without the benefit of an obvious catalyst. The rally pushed the venerable index back above its 50-day moving average and to within spitting distance (1.35% to be exact) of an all-time high.
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Stocks Laughing At Resistance

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MARKET SUMMARY

- So much for needing a rest.  Stocks start strong, finish stronger.
- Small caps explode higher, move through 200 day SMA as NASDAQ closes in on September high.
- September Durable Goods flop 1.3%, -0.2% ex-transports, -1.7% capital expenditures.
- Earnings beats continue to dominate, at least on the bottom line.
- Consumer Confidence surges.  Must be gas.
- Stocks laughing at resistance, power higher.
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A Spooky, Must-See Chart

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It is getting to be that time of year where writers feel compelled to somehow work the words spooky, scary, frightful etc., into their work. So, in keeping with tradition, it is time to step back from the blinking lights and the scary corrective phase the market has been in, and review a chart that is just plain spooky.
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Stocks Do Not Overcome Next Resistance

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 MARKET SUMMARY

- Stocks overcome a sluggish start, close flat, don’t overcome next resistance.
- Small caps post a nice comeback, show buyers still interested in growth.
- Likely need some more testing before ready to move upside again, but of course don’t assume that must happen.
- Pending Home Sales rise though less than expected, holding the same range it has traded in for several years.
- Services PMI falls for fourth month, testing the break to the higher high.

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Pretty Ugly Large Cap Index Patterns

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MARKET SUMMARY
- Another gain Friday but after good moves resistance starts to factor in.
- Great bounces but to what?  Pretty ugly large cap index patterns.
- Excellent patterns still exist in the leading groups with new stocks break higher.  The rebounding large caps, you would think, need to set up better patterns.
- Stocks are rallying even as wage growth stymies and huge percentages of US citizens make very little.

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Thursday Was Good, Bad, And Ugly

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To the casual observer, it was a good day on Wall Street yesterday. The Dow gained more than 215 points, the NASDAQ rallied +1.6 percent, and the Russell 2000 tacked on +1.8 percent. However, to those watching the action a bit more closely, Thursday was a case of the good, the bad, and the ugly.
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Indices Bumping Resistance After Good Runs

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MARKET SUMMARY
- Stocks charge higher, take on resistance, but still cannot take on Ebola.
- Late afternoon selling on a possible NYC Ebola case, but still good move.
- Indices bumping resistance after good runs.
- Looking to take some gain downside (AMZN, OTEX) and upside if we get the opportunity.
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Only One Story Really Mattered

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There were three stories in the market on Wednesday, but in reality only one really mattered on the day. You see, when reports start hitting the wires that there are multiple gunmen shooting at people in Canada’s Parliament building, traders’ thoughts turn to one thing and one thing only: terrorism.
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Riding Out This Test

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MARKET SUMMARY

- Early upside doused midday as terrorist(s) strike Canada.
- Market purportedly ‘crushed’ in the selling.  Perhaps that was just a bit of hyperbole.
- Stocks fade from next resistance, perhaps a bit earlier than planned, but volume was lower and most leaders are holding position.
- Riding out this test, looking for another upside move . . . when the pullback ends.

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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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