MDM - Market commentary October 18, 2011

Published : October 18 2011 at 22:20 ET

The move today in both the NASDAQ Composite and S&P 500 was above the threshold level required for a follow through day, but the action of leading stocks is still sub-par, and Apple Computer's disappointing earnings will have a negative impact on the NASDAQ-100 since AAPL carries about a 20% weighting in that index. It will be interesting to see how the NASDAQ-100 fares and whether it can shrug it off and move higher.

The unusually high levels of volatility also increase the risk in the model switching out of cash at this juncture as the odds for a continuation of the trend vs. a reversal are unclear. Should signs of quantitative easing drive the market higher, the model may be forced to switch to a buy signal. The model remains in cash for now.

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