MLR - PMP 11/5/14

Published : November 5 2014 at 8:22 ET

Major averages fell fractionally yesterday on mixed volume, a positive sign as the market looks to consolidate sharp gains made over the past 3 weeks. The ongoing downtrend in crude oil prices accelerated when Saudi Arabia reduced its price in oil to keep itself competitive. Commodities overall have been in a downtrend as global demand continues to wane, a result of the soft global economy. Futures up this morning after the Republicans took control of the Senate in yesterday's election and now have a majority in both houses of Congress. This is viewed as a positive for the market given the Republicans' favorable stance on economic and business issues in comparison to the economically oppressive Obama agenda of more government, more regulation, and more taxes.

Leading stocks continue to act well, as Alibaba (BABA) emerges as a big-stock leader following yesterday's earnings report and successful test of the top of its "IPO U-Turn" base formation. BABA strikes us as being similar to Google (GOOGL) in 2004. We have a position in the stock.

The European Central Bank meets tomorrow. The European Commission recently cut its growth forecast as Europe could sink into yet another recession. The pressure is on for the ECB to quicken the pace of QE.

Thus with central banks favoring the printing of money with the most recent action from the Bank of Japan, the US market which is in pole position looks to reap the benefits as it has since 2009. So while this bull market gets long in the tooth, quantitative easing puts all bets off as the market remains in uncharted territory as said by Alan Greenspan, the former Fed chairman. The trend is your friend and don't fight the fed. That said, there is no QE safety net for the US market at present so a correction of some magnitude is possible. Complacency is never an option.

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