Market Analysis

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

Head Fake? Or the Start of Something Bigger?

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There’s nothing quite like the feeling of making a good case for a certain outcome, and then having the market feed you a big mouthful of crow. Last week it appeared as if the market was stabilizing near support, but then a vortex of selling whipped through the market leaving us wondering – what the heck just happened?

Let’s begin today by taking a look at the technical damage that has been done, then we’ll switch gears and see what the economic backdrop behind all of this price action looks like.


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Posted in: Corrections Economy Primary Trend Stocks Volatility

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