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Lifted Off The Lows Buy Commodity Plays

The markets were shocked by the earnings report from Cisco Systems, Inc. (NASDAQ:CSCO). After an initial gap down, the markets floated off their lows and may be headed for the flat line. While technology is weaker, some stocks are still very strong and trying to carry the markets up., Inc. (NASDAQ:BIDU) is trading at $114.50, +2.81 (+2.52%).  In addition, Apple Inc. (NASDAQ:AAPL) is flat on the day.

The biggest helpers in bringing the markets off the lows of the day are commodity stocks.  From the start of the day, Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) have been flat to positive. Chevron is trading +$0.78 at $85.95.  In addition, other commodity stocks like Southern Copper Corporation (NYSE:USA) (NYSE:SCCO) are having solid days.  SCCO is trading at $46.50, +1.00 (+2.20%).

The bottom line continues to be the attempt by the Federal Reserve to inflate asset prices. Cisco through a curve ball in the mix, but with Veterans Day light volume, the markets are trying to recover to the flat line on commodity plays.  While the markets may end in the red, it is very likely it will turn out to be a minor down day.  Tomorrow is Friday and the Friday Effect will be in play.  The Friday Effect is where the markets are held up (POMO tomorrow) to get the average naive American spending the maximum money they would spend, on the weekend.  For examples sake, think about the two scenarios.  The first has the market dropping 300 points on Friday.  Would every consumer be shopping as much after hearing about that day?  The second scenario has the market flat to higher, after the markets have jumped 15-25% in the last three months. In this second scenario, it is much more likely millions if not billions more would be spent on the weekend by consumers. The vicious cycle starts again.  To get more insight, analysis and swing trades, join the Research Center.

Gareth Soloway
Chief Market Strategist
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