Market Summary

Last week was a very good week in the markets and a continuation of the uptrend that began in September. And while September and October are historically the weakest months of the year in the markets the announcement that the Fed will begin another round of Quantitative Easing (QE2) to stimulate the economy has meant that good news is good news and bad news is good news. The worse than expected jobs data released Friday then became good news to continue the rally. The next FOMC meeting is set for Nov. 2-3 and the market is already pricing in an announcement of further stimulus which if it does not get could be cause for a downturn.

The chart below of the S&P 500 shows that we are approaching the next level of resistance at 1170 which we should reach. After that I would say the areas of resistance are the round number 1200 and then the April high in the area of 1220. It is interesting to note that the $VIX again broke below two standard deviations of its 20-period moving average today which has in the past been a sell signal for the market approximately a week later. Will it happen this time we will just have to wait and see. Click on image to enlarge.

The table below shows that gold has outperformed this year up nearly 20% followed by the emerging market ETF EEM up 8.24%. For the week gold was up 2.13% followed by the EEM up 1.76% and the small cap index up 1.20%. Click on table to enlarge.