Stock Market -- Short Term

The market is threatening to roll over into correction mode for the third time since May.
As the daily chart shows, key short run indicators are trending down and the $SPX has
broken below both its 10 and 25 day m/a's. SPX Daily

You will note from the chart that breaks below the 25 day m/a over the past year have
engendered further weakness, and note too that the 10 m/a has rolled while the 25 day is
flattening and perhaps preparing to turn lower.

The increased volatility in the market since Jun. would allow the SPX to drop down to
the 1660 area before there is a threat of a shorter run trend reversal.

The SPX drew up to a major intermediate term overbought against its 200 day m/a when
the premium rose to a high +10% this spring. Since mid - May, the market has gone on
to new all - time highs, but it has been difficult to hold the gains as the SPX has moved
off a zippy tight speed line up into a lazier and more volatile pattern.

Traditional liquidity, inflation, short rate and economic indicator fundamentals remain
positive. However, the market grew fully valued over the Apr. -Sep. period and has been
vulnerable to bouts of profit taking. First, it has been the developing ambivalence by the
Fed over continuing the big QE program and now, we have the fiscal policy / debt ceiling
bullshit from official Washington to work through. Although the turkeys that comprise
the far - right in the House might ultimately relent on the debt ceiling, the group remains
nasty, destructive and cynical enough to damage the economy for as much as they can get
away with. This ensemble remains apoplectic that a man of color continues as president.

The price dips in recent months have rewarded aggressive buyers who trade. In this
emotionally charged environment, I am inclined to let the current dip play out more.