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Markets Find Support At Master Level

The markets are getting crushed today after worries over how much quantitative easing the Federal Reserve will do, bubbled up.  On this worry, the Dollar spiked higher taking the markets sharply lower.  In addition, Durable Goods orders were poor once transportation was subtracted.  The SPDR S&P 500 ETF (NYSE:SPY) is trading at $117.54, -1.18 (-0.99%).  The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $22.63, +0.11 (+0.49%).  This is a sharp sell off but may be a bottom for the day as a master trend line has been hit.  Note the chart below and the key trend line that has been touched.

While the selling is sharp today, be aware it is unlikely to see any major continued drop in the markets in the coming week prior to the elections and QE2. In addition, today happens to be a slight reprieve from POMO (permanent open market operations) by the Federal Reserve.  Yesterday was a POMO day and while the markets opened sharply lower, they quickly rallied back to the flat line.  Without POMO today, it appears the markets will have a red day.

Gareth Soloway
Chief Market Strategist
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