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U's V's and W's

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WAKE ME UP WHEN SEPTEMBER ENDS

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Deja Vu All Over Again

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BULLS HEAD FOR THE EXITS

WORLD UNREST RATTLES THE MARKETS

Unrest in Ukraine and in Israel/Gaza created heartburn for traders this afternoon.  First, a Malaysian passenger jet was apparently shot down over eastern Ukraine killing all of the nearly 300 passengers.  It is an incredibly sad tragedy and, at this point, facts are a little sketchy.  If the jet was taken down by Russian extremists, as has initially been reported, this will only serve to heighten the tensions in the region.  Soon after, Israel announced that it was starting a ground offensive into Gaza.  Bombs continue to be traded between Israel and Gaza militants.  At this point, Israel says it will be a limited incursion targeting specific objectives.  However, both the situations in Ukraine and in Gaza are very fluid and could spin further out of control in the hours and days to come.  

The uncertainty was not lost on the markets as an orderly sell-off began shortly before lunch time today.  The major market indices fell 1-1.5% closing near their lows of the day.  Despite the sharp drop, the markets continue to be resilient in the face of escalating violence in several places around the globe.   The markets are near its record highs and over-stretched a bit; a sell off of some significance continues to be expected.  With the weekend approaching and the world uncertainty, tomorrow could be another repeat of today.  It should be noted that the Russell 2000 (a small company index and a harbinger for how much appetite for risk traders have) led the markets down today falling 1.5%.  Over the last 2 weeks, the Russell has been down over 6% while the Dow and S&P have been up modestly.  This divergence is not to be taken lightly and will need to resolve itself one way or another as the market indices eventually all move in sync.  

Earnings have exceeded expectations to this point.  While only a few companies have reported, earnings have mostly been in line or above market estimates.  There will be a flurry of earnings over the next week so let's hope the good results continue.  We are entering into an historically very weak time of the year.  Caution is a good strategy for now.  

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20 YEARS AND COUNTING

MARKET SURGES

The market surged higher today with the S&P logging healthy gains of .65% but the real stars of the show were the Russell 2000 and NASDAQ gaining 2% and 1% respectively.  As readers of our newsletter know, we have been concerned with the divergence in the market between the large cap indices (Dow and S&P) and small cap and technology indices (Russell and NASDAQ).  While the S&P charged to new highs, the small caps and technology companies have been in a downtrend at worst or a consolidation at best.  That may have started to change today.

Early this morning, the ECB (European Central Bank) announced several new initiatives designed to spur the Euro Zone markets.  Some of the measures were extraordinary and certainly got the attention of traders in the US.  With the prospects of a healthier European market, the US market was off to the races.  We will see if today's euphoria has sticking power as tomorrow morning we get the much anticipated jobs report.  The market is currently overbought so a little bit of profit taking is in order.  We will see in due time if this rally can continue but we continue to see warning signs that all might not be as rosy as it seems.  We are not alone in our thinking...

FEAR OF A STOCK MARKET DECLINE IS ALMOST NON-EXISTENT

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PARENTING AND INVESTING EXPOSED

WHAT?

Average U.S. household spends more on federal regulations than for health care, food or transportation

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TWO ROADS DIVERGED

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THE SKY IS FALLING!

DO YOU HAVE A BENEFICIARY PROBLEM?

With tax day almost here, it is a good time to ensure that another part of your financial house is in order.  Beneficiary designation on your 401ks, IRAs and other retirement accounts should be reviewed periodically to ensure that your designated heirs have not changed or that your beneficiaries are who you want them to be.  Two common mistakes that people should pay particular attention to is naming your Estate as a beneficiary and having an ex-spouse as your beneficiary.  Having your Estate as a beneficiary has many pitfalls and should be carefully considered and, in most cases, should be avoided. Also, many people don't realize that their company 401k defaults by law to your spouse as beneficiary (at the time you started participating) and requires spousal approval to change.  If you have gone through a divorce, you should check to ensure that your 401k beneficiary is updated to reflect your current choices.  Here is a good article on 401k beneficiaries.  As always, please let us know if you have any questions or need to check on the beneficiaries of the accounts we manage on your behalf.

WHAT YOU NEED TO KNOW AND DO ABOUT THE HEARTBLEED INTERNET VIRUS

A Partial List of Websites Affected

THE FED IS KILLING THE RECOVERY

Famed investor Jeremy Grantham speaks with Fortune magazine about the recovery from the financial crisis of 2008 and his outlook for the next few years.

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SO YOU'RE SAYING THERE'S A CHANCE

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Breakout or Fakeout

THE MARKET CRASH OF 2008

We recently stumbled upon an interesting article about the market crash of 2008 and its possible cause.  While the media and Congress have largely blamed the financial institutions and their aggressive (reckless) policies, Peter Wallison argues that the government itself is to blame in this thought provoking piece.  Mr. Wallison further argues that one of the reasons that our economy continues to struggle are the very policies that Congress enacted to "fix" the causes of the 2008 market crisis. 

ALL CLEAR?

After a dismal January with losses not seen in some time, the markets have staged a nice rally over the last several days.  The markets remain down for the year but the S&P is quickly closing that gap. With the markets up sharply since February 3rd with no rest or pause, the next down leg will have extra significance.  If the pause or down leg is short and shallow, then we are likely to see gains in the near term and the risks seen in January will largely be abated.  However, if this rally fails and the markets turn down again, it will be key for the lows of the year to hold.  If not, we could be in for a much deeper (and more painful) correction.  As it is, while January was a poor month, the correction has been very mild to this point - especially considering the gains from last year.  The next few days will provide much greater clarity on the near term direction of the market.   Key levels of the S&P to keep an eye on are 1850 on the upside and 1740 on the downside.  Breaks either way will likely lead to big moves in that direction. 

MARKET BOUNCES BUT...

time will tell if this correction has run its course.  We think there is more downside to come.  We are not alone in our thinking as Louise Yamada (one of the most respected technicians of our time) indicates in this interview with CNBC. 

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DEFENSE WINS

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THE PREDICTIVE POWER OF JANUARY?

GENIUS SOLUTIONS TO LIFE'S LITTLE PROBLEMS

89 Tips You Should Know

Billionaires Dumping Stocks, Economist Knows Why

Billionaires Dump Stocks