STOCK MARKET – ACTION ALERT – BULL (WOBBLING LESS)

‘Turnaround Tuesday’ disappointed the bulls as an expected intra-day rally petered out and indexes were unable to post higher highs as compared to Monday. The stock market traded sideways most of the day after some mixed economic data but fell late in the session yesterday as German officials reportedly spoke out against moves by the ECB to expand its mandate in an effort to save the Euro. The Dow Industrials dropped 64.33 or 0.49% to 13,008.68, the S&P 500 dropped 5.98 or 0.43% to 1379.32, the NASDAQ lost 6.32 or 0.21% to 2939.52, and the Russell 2000 sank 4.64 or 0.59% to 786.94.

Consumer Discretionary led the decline (XLY -1.29%) after an unexpected decline in consumer spending. Energy was also weak (XLE -1.09%) as the price of oil fell. Materials were down too (XLB -0.68%) after Ecolab (ECL -3.96%) reported in line earnings but disappointing revenue. Technology was the sole gainer among the market sectors (XLK +0.41%) after strong results from Cirrus Logic (CRUS +23.22%) and a forecasted 70% increase in revenue. Apple held steady, thereby outperforming the broader market, because most of Cirrus’s sales go to Apple. Industrials also outperformed (XLI -0.28%) after Goodyear (GT +10.41%) easily topped forecasts. Healthcare traded in line with the market (XLV -0.62%) after Pfizer (PFE +1.39%) reported better than expected revenue and earnings as did Aetna (AET -2.91%) but traders worried about the earnings quality as its pretax, prior-period reserve development fell from $188 million to $38 million.

Yesterday morning I wrote: “We are creeping into overbought territory. So, from a trading perspective I would be looking to take profits over the next day or so, regardless of the FOMC meeting.” Well, I acted on my words and Platinum subscribers were instructed to ‘ring the register’ in our long SPY and VTI (Total Stock Market Index) positions yesterday morning. Breadth was negative and volume increased forming several Negative Leibovit Volume Reversals. Whether, these signals are distortions due to anxiety over today’s FOMC announcement and/or nervousness whether Mario Draghi is going put the European printing press into high gear, I cannot say. Certainly, investors (and traders) would love to see a QE3 announcement as trigger to get stock prices higher (again!), but does it mean a damn thing anyway? Some caution is warranted here from a trading perspective, but that makes sense anyway around FOMC periods. If we’ve topped out as we did back on June 19, and July 3, look for another 50 point correction in the S&P 500 which would translate into 1340 (close of 1379.32 yesterday).

From the VRtrader.com website here is a link to World Market Indices:

http://www.vrtrader.com/vr_free/worldmarkets/index.asp

How many of you out there would be interested in ‘Money-Management’? I am continuing to take a poll among current subscriber clients. This is an account where many of the trades and recommendations made herein are implemented in your account? I would not be interested in accepting small accounts (accounts under $100,000). Let me know. It is in the early stages, but I am working on a couple of potential opportunities where such a strategy could be employed. There would, of course, be a management fee. I will keep this notice posted for a few weeks.

Mark Leibovit’s Gold Letter, # 1 Gold Timer for 10 year period & #2 Gold Timer for 2011

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