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MLR - PMP 11/19/13

Major averages fell on lower volume. Weakness in two leading industry groups, bio-techs and solar companies, along with comments made by Carl Icahn put pressure on the markets. Icahn said that stock earnings were a mirage bolstered by low interest rates due to the printing of money, and that the market could experience a substantial correction.

That said, outside views often cause the market to drop for only a very brief period before the major driving forces behind the trend continue to drive the move. It is somewhat akin to high flying companies that get downgraded on valuations so suffer a brief pullback before resuming their uptrend. This, of course, assumes that it was Icahn's remarks that were the sole cause of the market's sell-off. If they were, then we would expect the market to recover relatively quickly.
Quantitative easing is a powerful force and has been responsible for the bull market that began in 2009. With QE on full blast, and tapering perhaps further off than expected, the bull market could have longer to run. While one could say the bull is getting long in the tooth, this bull is unprecedented as it has been driven and manipulated by one of the easiest money policies in history, so the age of the bull is perhaps not so relevant, and it is more important to pay attention to factors that play into bull markets- low inflation, low interest rates, and favorable monetary policy.

Qiwi (QIWI) and Trina Solar (TSL) are both gapping up after earnings. QIWI earnings are strong and sales are accelerating. QIWI operates electronic payment systems in Russia and Commonwealth of Independent States consisting of countries that were part of the former Soviet Union. TSL is part of the solar group which is currently ranked #1. Even though TSL earnings are negative, future earnings are expected to be very strong. If these gap-ups become actionable this morning we will report on them as necessary.

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