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MLR - PMP 1/29/14

The major market averages rebounded on lower volume with the NASDAQ Composite off 4.5% and the S&P 500 was 4.2% from peak to trough. Pre-open futures are down sharply after having given up their overnight gains and reversing more than 10% from their overnight peaks at the time of this writing. Futures are town because the Turkish central bank raised rates beyond expectations which strengthened its currency.

The Federal Reserve has emphasized that low interest rates will continue even when unemployment reaches 6.5%, especially if inflation remains low. This pledge is designed to sooth markets as tapering continues. But for rates to remain low, the Fed will have to use another tool in its bag of tricks. This should be bullish for stocks though, at some point, a day of reckoning could occur as a price may have to be paid for the massive amounts of money that have been printed since 2009. That said, with Janet Yellen on deck as the next Federal Reserve Chairperson in March, low rates will be the target as Yellen is known to be pro-quantitative easing. Whether the Fed can continue to keep rates low will be its challenge.

Although some leading stocks rebounded yesterday, even quite sharply as in the case of YY, Inc. (YY), for example, caution is still warranted as today's Fed policy announcement will likely have the potential to move the markets one way or the other. We will continue to closely monitor price/volume action in major averages and leading stocks to determine whether the market direction model can sit tight on a its buy signal.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2024 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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