Stability Does NOT Mean A Rally

The markets are showing signs of stabilizing. For the third day, stocks moved in a much narrower range and internals showed signs of improvement:

1) New lows drop dramatically

2) VIX decline continues

3) Libor rates down 15 days in row

4) elections ending

What we need to see now:

--consistent decline in selling pressure

--more real buying interest

--more stability in credit--no good to have lower LIBOR if no one is lending!

Stability does not mean a rally—even bulls expect a trading range. For example, consumer discretionary, materials and energy were the biggest gainers last week, but traders did some old-fashioned profit taking today as those groups were among the biggest decliners.

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