Major averages fell Friday on exaggerated volume due to quadruple witching. The negative market reaction to the Fed's latest statement is largely due to concerns about the slowing global economy. So while the Fed postponed a rate hike, the bigger picture remains stormy. Quantitative easing which began in late 2008 then followed by other central banks around the globe has little to show for it in terms of improving economic health as a number of countries near recession. Even in the US, companies have overall shied away from expanding preferring instead to buy back shares, while banks have been slow to lend to newer, smaller companies.
The market may be working on a longer-term top, but the reaction rally that has occurred since the "Capitulation Monday" lows of four weeks ago remains intact. While the indexes sold off hard on Friday, many recovering leaders continued to act normally or constructively, such as Facebook (FB), which was up on Friday and has held above its 50-day moving average over the past few days. Even in a choppy, go-nowhere environment, reasonable short-term profit opportunities have shown up a number of times this year in key stocks on both the long and short side as shown in our Reports section. Thus it is key not to take one's eye off the ball even in a challenging sideways market environment.
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