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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:

The fourth quarter started off on a sour note last Wednesday, with the S&P 500 posting a 1.32% drop for the day (the tenth worst start to October in the index’s history), a day after the index finished the month of September down and the third quarter up. While it shed 1.6% for September, the index posted a .6% gain for the third quarter, marking its seventh quarterly gain (and the longest streak since 1998).

Source: dshort.com

Stocks rallied following the jobs report on Friday, recovering some of the week’s losses. The S&P 500 saw its biggest one-day gain in two months, and finished the week down .8%, and the Dow had its best day in 7 months leaving it with a weekly loss of .6%.

While the S&P 500 posted a modest gain for the second quarter, small-cap stocks suffered: the Russell 2000 posted a 7.7% drop for the quarter – its worst performance in 3 years. The index extended its losses into the start of the fourth quarter, declining 1.5% on Wednesday and entering into correction territory (a technical correction is defined as a 10% decline from a recent peak). The index rebounded toward the end of the week, and finished with a loss of 1.3% (it’s fifth straight weekly decline).

September was not a good month for gold (or for other commodities), with gold ETF holdings at the lowest level in half a decade. After ending a tough month, the metal declined on Friday following the release of a solid jobs report, turning negative for the year.

Speaking at Georgetown University last week, IMF Managing Director Christine Lagarde said that the global economic rebound is weaker than the fund originally projected, and now only a modest rise in global growth in 2015 is expected: “there is a recovery but as we all know – and can all feel it – the level of growth and jobs is simply not good enough. There are some serious clouds on the horizon”.

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