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Market Update

Market Direction Is Important –

Updated Chart of the S&P 500 and Secondary Signals

Of our Four secondary indicators under our MTI:

  1. Relative Strength Index (RSI)-Negative

  2. Chaikin Money Flow (CMF)-Positive

  3. MACD- Negative

  4. Money Flow Index-MFI-Positive

More on the Market and the Economy:

Stocks dropped sharply on Friday, as good news started to sound like bad news when an upbeat jobs report led to speculation that the Fed would hike rates sooner than later. The S&P 500 ended Friday with its steepest decline in two months, and closed the week with a 1.6% loss – its second weekly loss in a row.

Source: dshort.com

Gold dropped following the jobs report, suffering it worst day since December 2013 and erasing its gains for the year.

This week data will be released on small business optimism, business inventories, retail sales and the Job Openings and Labor Turnover Survey.

Lower oil prices and a stronger dollar depressed activity in agriculture, manufacturing and energy in several regions, according to the Fed’s latest Beige Book. The report found moderate growth in six of the Fed’s 12 districts, combined with slower growth in the remaining districts.

The Federal Reserve reported last Thursday that the 31 big banks subjected to its stress test would have sufficient capital to absorb $490 billion of losses during a downturn. This marks the first time since 2009 that no bank fell below the minimum level of capital. Under the test scenario, stocks fell by 60% by the fourth quarter of this year while housing prices fell 25%. Economic growth dropped by 4.5% and the jobless rate reached 10%. The biggest US-based banks “continue to build their capital levels and to strengthen their ability to lend to households and businesses during a period marked by severe recession and financial market volatility” according to the Fed.

The US will hit its debt limit on March 16th unless Congress raises the debt limit. The Treasury will start taking “extraordinary measures” on March 13th to finance the government temporarily. In a letter to Congress, Treasury Secretary Lew wrote that “Only Congress is empowered to increase the nation’s borrowing authority and I hope that Congress will address this matter without controversy or brinkmanship. I respectfully ask Congress to raise the debt limit as soon as possible”. The Treasury secretary emphasized that “increasing the debt limit does not authorize new spending commitments” but “simply allows the government to pay for expenditures Congress has already approved”. The debt limit has been suspended for the past year, after Congress passed the Temporary Debt Limit Extension Act in February of last year. The nation’s debt stands at $18.1 trillion.

The IRS is warning tax payers about scams during this year’s filing season with the release of its list of “Dirty Dozen” scams, “whether it’s a phone scam or scheme to steal a taxpayer’s identity, there are simple steps to take to help stop these con artists”.

Among the list of this year’s “Dirty Dozen” from the IRS:

  1. “Phone Scams: Aggressive and threatening phone calls by criminals impersonating IRS agents remains an ongoing threat to taxpayers. The IRS has seen a surge of these phone scams in recent months as scam artists threaten police arrest, deportation, license revocation and other things. The IRS reminds taxpayers to guard against all sorts of con games that arise during any filing season.

  2. Phishing: Taxpayers need to be on guard against fake emails or websites looking to steal personal information. The IRS will not send you an email about a bill or refund out of the blue. Don’t click on one claiming to be from the IRS that takes you by surprise. Taxpayers should be wary of clicking on strange emails and websites. They may be scams to steal your personal information.

  3. Identity Theft: Taxpayers need to watch out for identity theft especially around tax time. The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number. The IRS is making progress on this front but taxpayers still need to be extremely careful and do everything they can to avoid becoming a victim.

  4. Return Preparer Fraud: Taxpayers need to be on the lookout for unscrupulous return preparers. The vast majority of tax professionals provide honest high-quality service. But there are some dishonest preparers who set up shop each filing season to perpetrate refund fraud, identity theft and other scams that hurt taxpayers. Return preparers are a vital part of the U.S. tax system. About 60 percent of taxpayers use tax professionals to prepare their returns.

  5. Inflated Refund Claims: Taxpayers need to be on the lookout for anyone promising inflated refunds. Taxpayers should be wary of anyone who asks them to sign a blank return, promise a big refund before looking at their records, or charge fees based on a percentage of the refund. Scam artists use flyers, advertisements, phony store fronts and word of mouth via community groups and churches in seeking victims.

  6. Fake Charities: Taxpayers should be on guard against groups masquerading as charitable organizations to attract donations from unsuspecting contributors. Contributors should take a few extra minutes to ensure their hard-earned money goes to legitimate and currently eligible charities. IRS.gov has the tools taxpayers need to check out the status of charitable organizations. Be wary of charities with names that are similar to familiar or nationally known organizations”.

The Food and Drug Administration tops the list of the most understood US government agencies, with 92% of respondents saying they understand what the agency does, according to a Harris Poll. The FBI and the IRS both scored highly, with 90% understanding. The National Institutes of Health, responsible for biomedical research, came in last with 56%.

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