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Well…the bulls managed to win the most recent battle for Stocks as China stimulus and stability in Crude Oil came to the rescue (US employment numbers last Friday added a positive as well).  Both Chinese fiscal and monetary stimulus plans took the heat of the imploding economy over the past couple of weeks, but in reality it’s simply putting a band aid on a laceration.  The two factors (China and Oil) managed to send Stock prices up through some important technical levels and the upside for the major US indexes probably has a few more percent upside potential.  The problem with this scenario however, is that the higher that stock prices move, the higher the risk rises for holding the air based assets.

For now, technicals rule and they are still a bit positive for stocks, however the long term remains that the China situation is dire and air continues to exist in many equity markets around the globe.  The fall-out from the collapse in Oil has not fully been felt yet either…not even close.

Did someone say Gold?  I think the Doc did!  This market has entered a positive mode, although the next few days could include a bit of a pullback from recent gains.  Fundamentals are red hot for this market, but there is a little more upside work that needs to be done before momentum can start to really kick in.


Stephan Kudyba (MBA, PhD)                      THE MARKET DOCTOR


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