Market Summary

Market direction continues to go up while the Volatility Index ($VIX) continues down and the next target for the market is the 1200 mark on the S&P 500. Anticipation of the second round of Quantitative Easing (QE2) seems to be driving the market higher and began after Ben Bernanke gave a speech August 27, 2010 that can be found HERE. The next meeting of the FOMC scheduled for Nov. 2-3 should be pivotal in this market as the Fed gives further guidance on its monetary policy. What is interesting is that the US Dollar, which began a decline around the same time as the speech referenced above was also the same time that the stock market began its most recent rally. Clearly monetary policy is affecting the market and responsible, at least in part, for the rally. Click on the chart to enlarge.

While gold remains up the most for the YTD period it has come off its highs and the Russell small cap index, up the second most for the year, was relatively flat for the week as were most of the other markets. Of note then for the week are the decliners of greater than 1% which includes FXI, EEM, GLD, and UNG. China raised its key interest rate last week and raised capital requirements at banks. China's GDP grew 9.6% from a year earlier in the third quarter, slowing from the 10.3% rise in the second quarter. Click on table to enlarge.