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Thursday was the day that we tested the first support for the S & P 500 and it appears to be successful. I would want the S & P 500 to hit a new all time high before I would venture into the markets again. The rewards have been large so why risk giving it back. The apparent reason for this rebound, beyond the technical reasons, is once again the FED.

The Fed’s reaction to market volatility were the soothing words of St. Louis Federal Reserve President James Bullard. He said, “We have to make sure that inflation expectations remain near our target. And for that reason, I think a reasonable response by the Fed in this situation would be to … pause on the taper at this juncture, and wait until we see how the data shakes out in December.”

So is the stage set to bring the Quantitative easing back in place or is it just rhetoric to calm the markets? Kind of makes you wonder what has happened to the free market society………

So, at this point in time we have had a test of the support at 1820 on the S & P 500. We are now left to see how the markets evolve, a lot of damage has been done.

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The markets need to move above the 50-day moving average  and stay there, then the markets need to set a new high. That is a lot to accomplish.

At some time the Fed is going to have to let the free market system work. Better now than later.

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