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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)-Negative

  3. MACD- Negative

  4. Money Flow Index-MFI-Negative

More on the Market and the Economy:

After a brutal selloff, the market was lifted last Thursday when St. Louis Fed President James Bullard suggested that the Fed should consider delaying the end of its bond buying program due to the recent drop in inflation expectations: “Inflation expectations are declining in the US. That’s an important consideration for a central bank. And for that reason I think a logical policy response at this juncture may be to delay the end of the QE”. The Fed has tapered its QE by $10 billion at each meeting this year, and has said it expects to end the program at the FOMC’s October meeting.

Stocks rallied on Friday, getting a boost from upbeat earnings reports from General Electric, Morgan Stanley and Honeywell. The S&P 500 trimmed its weekly loss to 1.02%; that loss marked the fourth consecutive weekly decline …the longest losing streak for the index since August of 2011.

Source: dshort.com

Small caps stocks managed to defy the selling pressure, and the Russell 2000 finished with a weekly gain of 2.8% – its first weekly gain in seven.

This week will bring data on existing home sales, consumer prices, new home sales and leading economic indicators.

The US government’s budget deficit is back to prerecession levels, as the Treasury Department reported that the fiscal 2014 shortfall narrowed to the lowest level as a share of the economy (2.8%) since 2007. In dollar terms, at $483 billion, the deficit was the smallest since 2008. Revenue rose 8.9% while spending rose 1.4%.

The 2014 fiscal gap amounted to about a third of the record $1.4 trillion deficit in 2009. According to Treasury Secretary Jacob Lew, “…policies and a strengthening US economy have resulted in a reduction of the US budget deficit of approximately two-thirds – the fastest sustained deficit reduction since World War II”.

Source: Department of the Treasury

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