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Stocks Off Highs After Jan. Philly Fed Survey

Stocks off their highs as the January Philly Fed survey came in below expectations; more importantly, the prices paid component (an indicator of inflation) rose from 47.9 to 54.3. Above 50 indicates expansion.

Momentum weakens. It is not unusual to have a dip in the middle of January (we had one last year), and we are in the second day of a modest decline.

Technicians have been expecting this for weeks, since 1) bullishness remains high, and 2) with the exception of a couple weeks in November, we have gone nowhere but up since September.

So it should not surprise anyone that:

1) IBM and Apple's stellar earnings are not advancing techs;

2) the other leading sector, commodity stocks (energy and materials) are selling off for the second day in a row on: a) a strong GDP report from China, leading to concerns of higher rates there, and 2) the same technical factors affecting techs (two year highs for energies and material indices)

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