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10/13/2014

The host of factors that introduce volatility to the US Equity markets has intensified over the past week as Ebola fears surfaced.  This has added yet another variable that has thrown a monkey wrench into the goldilocks bull market for stocks that has dominated the pulse/direction over the past two to three years. We first made mention of the growing pressures for US stocks a few weeks ago here.

On the positive side of the coin, the most recent unemployment report seemed almost unbelievable as the outright rate dipped below the 6% level (not without serious criticism as to the real state of job creation and wage issues that prevail).  Despite this euphoric report, the FOMC maintained a stance of low rates into the foreseeable future.  Unfortunately, these positives could not hold off the bearish sentiment for stocks.

For the first time in months, perhaps even over a year, longer term technical indicators have been breached for some of the major indexes (eg. NASDAQ break point just over 4300 and S&P at 1950).  The path of least resistance remains lower, but we must have to add serious caution to bucking the long term bull trend…there remains a number of tricks that can be introduced to try to salvage a return to higher prices for stocks, but given the mounting factors that are weighing on goldilocks….the downside is in favor.

Keep a close eye on any news regarding Ebola issues in the US.

 

Stephan Kudyba (MBA, PhD)                      THE MARKET DOCTOR

 

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