Market Analysis

It’s Retest Day

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I’ve been sitting here parsing through all kinds of economic data trying to make the case for a bear market, and I’ll be honest – it’s tough. There just aren’t many data points that portend a rolling over of the business cycle, or primary trend.

There are of course a few, such as the declines in housing starts and building permits (shown below), but other than that, most leading indicators remain in firm uptrends (the S&P 500 being the notable exception).


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Posted in: Corrections Economy Momentum Primary Trend Stocks

Dow Theory “Lines in the Sand” Have Been Drawn

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Let’s begin today’s note with a quick update on the S&P 500. Two weeks ago, on October 30th, I suggested that a possible short-term bottom was coming into view based on relative price action in the VIX and small-caps.

As it turns out, the October 29th bottom did hold, and the S&P subsequently rallied back up to where it began its second leg down (at approximately 2815). From there, we had three down days of increasing magnitude, followed by today’s attempt at a rally.


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Posted in: Dow Theory Emerging Markets Market Breadth Primary Trend Stocks

The Perfect Storm

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Trading has been somewhat subdued over the past few days, no doubt a result of the midterm elections. But thankfully, the uncertainty surrounding this event will vanish quickly, which should lead to a momentary reprieve.

As it stands now, the Democrats are likely to win control of the House, while the Senate may become a bit more red. This will definitely change the balance of power, but it is unlikely to cause a significant change in the overall economic outlook.


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Posted in: Dollar Earnings Economy Elections Interest Rates

Global Growth is the Culprit

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Wow, what a month it’s been. If you didn’t know any better, you might think the U.S. economy was screeching to a halt. The vicious selling and massive price swings that we’ve seen are characteristic of a bear market, and yet beneath the surface, things are oddly much more placid.

Given the nature of this correction, today’s site is going to be a bit longer than usual. Not only do I believe a lot of items warrant your attention, I think there may be some opportunity to be had from all this recent selling. So let’s jump right in.


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Posted in: Corrections Earnings Economy Global Growth Junk Bonds Volatility

Fighting the Fed

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Last week we walked through a variety of data points to reinforce the fact that the U.S. economy remains strong. With that as a backdrop, today I’d like to discuss some of the concerns that are permeating the market, particularly what’s going on with the Federal Reserve.

As we walk through this, there are two specific items I want you to keep in mind. First, we need to be viewing all developments through the lens of corporate profits.


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Posted in: Dollar Earnings Economy Federal Reserve Interest Rates Stocks

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