The payroll report energized the market for a Dow gain of +208 points but all the indexes rallied only to downtrend resistance.

Market Statistics

The Nonfarm Payrolls for September came in much better than expected at +248,000 compared to estimates for +215,000. Even better the unexpectedly low August reading of +142,000 was revised to +180,000 and the +212,000 reading for July was revised up to +243,000. This was a total gain of +671,000 jobs for the last three months. Over the last 12 months the gain was 2.635 million jobs or an average of roughly 219,000 jobs per month with the Q3 average at +224,000 and Q2 average at +267,000. This year is on pace to be the best year for jobs since 1999.

The unemployment rate declined from 6.1% to 5.9% thanks to a gain of +232,000 jobs in the separate Household survey and a decline of -97,000 in the workforce. Unfortunately the workforce participation rate fell to 62.7% and a new 36 year low. More than 92.6 million people are not in the labor force and that was an increase of +315,000 over August. Yes, 232,000 people found jobs but another 315,000 dropped out of the workforce. There are officially 9.3 million unemployed but the U6 number that includes all categories of unemployed declined only slightly to 11.8% or 18.6 million.

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Sectors contributing to the payroll gains included retail +35,000, business and professional services +81,000, leisure and hospitality +33,000. Government payrolls rose by +12,000. While the rising number of jobs is slightly Fed negative the average hourly earnings were flat at zero. Over the last three months the average is only +0.1% growth thanks to a +0.3% rise in the prior month. Without wage inflation the Fed will not be in any hurry to raise rates.

The BLS has a "diffusion index" that covers 249 component industries and supplemented by a 141 industry index for manufacturing. The index is helpful in assessing the overall state of the economy and functions as a leading indicator of manufacturing employment levels. I explained this index because it is going in the wrong direction. The index declined from 62.7 last month and 67.8 the prior month to 57.8 in September. This indicates the breadth of job creation is narrowing. We got good news in the number of new jobs but bad news that the number of industries that are hiring is shrinking.

The majority of the new jobs in September went to the age 55 and older category. The number of unemployed in that age group declined from 1.549 million to 1.332 million. The unemployment rate for that category fell from 4.6% in August to 3.9% in September.

While there were things not to like about the payroll report the majority of it was positive. Jobs are increasing and the economy continues to strengthen. September's headline number will be revised again next month but nobody will care. The headline was all that mattered.


If you are really into the numbers here is a snapshot of the changes since December 2007 and just before the recession.

Number of total jobs 146.3 million vs 146.6 million today. A +300,000 gain.

Total number of unemployed 7.6 million vs 9.3 million today, +1.7 million more.

Unemployment rate of 5.0% compared to 5.9% today.

U6 unemployment 8.8% vs 11.8% today, +3 points higher today.

Average hourly earnings $24.33 vs $24.53 today, up a whopping 20 cents.

Employed part time for economic reasons 4.6 million vs 7.1 million today, up +2.5 million.

Employed part time for economic reasons as % of labor force 3.0% vs 4.6%.

Labor force participation rate 66.0% vs 62.7% today, -3.3%.

There was another economic report on Friday but the news was trumped by the reaction to the payroll report. The ISM Nonmanufacturing (Services) Index for September declined slightly from 59.6 to 58.6. The index was poised to break out to a five year high last month but the September weakness killed that possibility for at least another month.

On the component front the new orders declined from 63.8 to 61.0 and backorders fell from 54.5 to 52.0. Anything over 50 is still expansion. Employment rose from 57.1 to 58.5 and the highest reading since 2005 and exports spiked from 52.5 to 57.5. Overall business activity declined from 65.0 to 62.9. Prices paid fell from 57.7 to 55.2 and confirming there is no inflation in sight.

This was still a decent report despite the minor declines. The economy in the services sector is still growing but painstakingly slow. Twelve of the 17 industries reporting said they expanded in September. The five that contracted were arts, entertainment and recreation, mining, educational services, public administration, and other services.

The ISM Manufacturing on Wednesday declined from 59.0 to 56.6. New orders declined from 66.7 to 60.0 and order backlogs fell from 52.5 into contraction at 47.0. Employment declined from 58.1 to 54.6. Clearly the manufacturing sector is softening a little faster than the services sector but still moving slowly higher.


The economic calendar for next week is fairly bland on economic reports. There are several but nothing the market really worries about. The big event is the FOMC minutes on Wednesday. This was the last meeting before QE is to end later this month so the minutes will be scanned for references to ending QE and what happens after QE is over. The "considerable period" phrase was undoubtedly discussed. This is the most important event for the week.

Earnings begin for Q3 with YUM Brands on Tuesday and Alcoa, Costco and Monsanto on Wednesday. This is the preshow ahead of act one that begins the following week.


There were so many Fed speakers next week I had to put them in a separate calendar. There are two notable speakers. Bernanke will speak on Wednesday and the new Vice Chairman Stanley Fischer will speak on Thursday. I view Fischer as the biggest speech of the week. He has been relatively quiet since his addition to the Fed and I see him as Yellen's successor. I personally don't see Yellen staying around too long because the kitchen is going to heat up relatively quickly and I think she will decide the hot seat is more than she bargained for and announce her retirement. I could be wrong but I am betting the new president in 2017 will get to appoint a new Fed head as one of his/her first duties.


There were two new splits announced last week by SNN and CALM. Of the two the CALM split may be worth playing. Shares jumped on the announcement to a new high.


The payroll report overshadowed all the regular news but reporters still managed to slip in an Ebola story a couple times an hour. The patient in Dallas, Thomas Duncan, is still in the hospital in serious condition. His partner and her 13-year-old son and two 20-something nephews left their apartment where they had been quarantined for 4 days and are now living in a donated private residence. In the apartment they had been sleeping on the three beds where the infected patient had slept along with piles of dirty linen and infected surfaces in every direction.

On Friday a hazmat team in full body suits showed up to decontaminate the apartment. They filled several 55 gallon drums with the contaminated linens and clothing and removed three mattresses from the apartment before they hosed it down with disinfectant. Duncan had thrown up outside the apartment on the way to the ambulance so all traces of that had to be disinfected as well.

A doctor studying Ebola said an infected person is a virus factory producing up to a hundred million virus particles per milliliter of blood. Coughing, sneezing, spitting, vomiting, etc puts everyone around them at risk of a stray splatter that could infect them.

More than 50 people are being isolated and "monitored" as a result of some serious mistakes in the patient's diagnosis and treatment. Monitoring means a health care professional shows up twice a day to take their temperature and ask them questions about how they feel.

The patient's partner, identified as Louise Troh, has a daughter who is married. The daughter and husband both helped care for the patient in the days before he was hospitalized and are now reported to be showing signs of Ebola. That suggests there will be another circle of contacts to be monitored.

Elsewhere Howard University Hospital in Washington has admitted two patients with Ebola like symptoms had traveled to Nigeria recently. Officials in Georgia have isolated a man with Ebola like symptoms that had recently been in Africa. An NBC News cameraman with a confirmed case of Ebola is on his way back to the U.S. and will be hospitalized in Nebraska.

I strongly believe that other than a few random cases there will not be an epidemic in the USA. Now that the event in Dallas has awakened the healthcare community they should be a lot more proactive about questioning and testing anyone showing symptoms even close to those with Ebola. Right now, bad news sells, and the news agencies are blasting the headlines to capture viewer attention.

Sales of 3M particulate respirators, starting at $22, were up +4,004% over the last month according to Amazon. Soap.com said sales of hand sanitizers rose 20% over just the last week. Dupont said sales of gloves, eye protection, face masks and fluid resistance gowns and suits were soaring. They were doing everything they could to assure supplies and were shifting inventories from other locations to areas of need. Production has been tripled on some items. Amazon said multiple books dealing with surviving Ebola had risen 49% over just the last 24 hours. Sales of Tyvek suits and respirators were soaring. Lifesecure, sellers of pandemic-protection products saw a "several hundred percent" increase in sales.

Stock news

Tesla (TSLA) was up for the second day after Elon Musk tweeted on Thursday "About time to unveil the D and something else." That prompted a new wave of speculation on what that could mean. Some believe it is a new model. Others believe it refers to "dual motor" or all-wheel drive. Currently Tesla's are two-wheel drive. The Model X SUV due out in late 2015 is dual motor all-wheel drive. The picture he tweeted with it had a date of Oct 9th, which is assumed to be the date of an announcement.


Tesla shares had declined from $285 when Musk made the comment about being overpriced to $235 on Wednesday. His tweet caused a $15 bounce and added $1.8 billion to Tesla's market cap. Elon was smart and made the Tweet just as shares returned to their long term uptrend support. If you are a gambler you still have three days to enter a position ahead of Tesla's Oct 9th announcement.


Musk gets more headlines for Tesla with a single tweet than Nissan can get with millions of dollars in advertising. You probably don't know this but the Nissan sells about twice as many of its Leaf electric vehicle than Tesla sells Model S vehicles. Of course the Leaf is $35,000 and the Model S $85,000. According to Claudia Assis at MarketWatch the numbers below are the sales figures for September for all of the major electric car models.


Palo Alto Networks (PANW) rallied $6.50 on Friday after Piper Jaffray gave it a buy rating with a $110 price target. After JP Morgan's giant hacking disaster the new field of security technology companies are seeing money flow their way. Piper surveyed 39 resellers and found that PANW and FireEye (FEYE) were clearly outperforming the rest of the group. Other recent ratings on PANW were Janney Capital and Roth Capital both with buy ratings.


GoPro shares recovered slightly from their Thursday crash but there is still a cloud hanging over the stock. GoPro crashed -6.9% on Thursday after JP Morgan said it was releasing 5.8 million shares from lockup in order to gift the Jill and Nicholas Woodman Foundation. Traders immediately thought the stock was going to be sold and they hit the sell button. After the crash the bank and the founder Nich Woodman said the shares were not going to be sold. The timing of the gift was for tax reasons and there was a short window of opportunity to gift the shares before the lockup expired in December.

Some analysts have claimed as much as 40% of the GoPro float is short. That is a huge amount especially on a stock that up until Thursday only went up. The lackluster +$1.50 gain on Friday suggests the GoPro bulls are still cautious. There was actually positive news on Friday as well. The company said it was releasing its new HERO4 premium camera with sales to begin this weekend. They announced a new deal with Best Buy that will triple GoPro's in-store presence with a 12-foot display and a 40-inch monitor. Jonathan Harris, Senior Vice President of Intergalactic Sales, the additional space would provide a compelling experience for customers in Best Buy stores.


Apple (AAPL) shares continue to struggle despite positive news about China and the new iPad announcement due out on October 16th. On Friday Deutsche Bank cut Apple's rating to hold saying Apple is running out of catalysts. Apple has a very large installed base of iPhone 4s that should be prime upgrade candidates. However, the analyst felt estimates for iPhone sales were still too optimistic. "We expect supply constraints to limit unit shipments through year-end."

Jefferies analyst, Sundeep Bajikar, initiated coverage on Monday with a hold rating. He said Apple's premium products has served them well but overall device growth is slowing and weighted towards the lower price points.

Apple is also expected to announce a delay in delivery of the Apple Watch. Reportedly there are manufacturing problems that are slowing development.

While Apple is expected to announce a larger 12.9 inch iPad the iPhone 6+ is expected to cannibalize iPad sales. The 6+ is huge and nearly the size of a mini tablet.

Another problem facing Apple today is the high radio frequency (RF) output of the new iPhone 6 units. The web is buzzing with worries over the RF dangers. Apple has warned repeatedly about the dangers of RF in its prior phones. Analysts believe these warnings ar ejust insurance against some future suit if somebody came down with cancer.

However, the FCC has a legal limit of 1.6 watts per kilogram (W/kg). The iPhone 6 and 6+ have a 1.18 W/kg rating when positioned near a users head. However, when Wi-Fi and Bluetooth are running simultaneously the rating jumps to 1.58 W/kg and just barely below the legal limit. For comparison the Samsung Galaxy Note 3 has a rating of 0.35 W/kg. The buzz on the Internet is a caution against carrying an iPhone 6 in your pocket where your organs don't have a thick skull to protect them from RF radiation.

Apple shares have fallen out of their uptrend support channel and could be headed to $95 soon.


Global Payments (GPN) reported earnings on Thursday of $1.22 compared to estimates for $1.15. In addition they raised their full year guidance. Shares spiked about $4 on a bad day in the market. On Friday Morgan Stanley upgraded GPN to neutral and raised the price target from $66 to $74. While that was not a glowing upgrade the stock rallied another $4 to close at $76 and a new high.


JP Morgan (JPM) disclosed that 76 million customers and 8 million small businesses had their contact information stolen in the data breach between June and August. The data stolen was names, addresses and email addresses but account numbers, passwords and personal information like social security numbers were not. Despite the inability to get the account numbers the breach is still a significant problem. Having 84 million email addresses and the name/address to go with it is a perfect opportunity to setup numerous phishing operations in an attempt to get the good stuff.

A phishing email is a fake email sent to you that appears to come from a reputable source. In this case they could send you an email with your identifying information and format the email to look like it came from JP Morgan Chase. "We would like to warn you that we experienced a data breach and we are emailing all our customers asking them to validate their accounts. Please click this link and log into your account and verify your identity." By clicking their link to a phony JP Morgan/Chase website where you put in your login id and password they have effectively stolen that info and now they can access your account and remove all the money.

Late Friday we learned that multiple state Attorneys General are launching inquiries into the breach and we know they will eventually find some way to fine or penalize the bank for billions of dollars.


I think we have a bigger problem than just some hackers trying to steal and sell financial information. The New York Times said nine other banks were also infiltrated by the same group of hackers. The tracks they left point to a group working out of Russia that appears to have connections to the Russian government according to administration officials briefed on the matter.

Some American officials speculate the breaches were intended to send a message to Wall Street and the U.S. about the vulnerability of the digital network and some of the world's most important banking institutions. One senior intelligence official said "It could be retaliation for the sanctions" but they could also have mixed motives with the intention of profiting off the data they stole.

JP Morgan's security team first learned about the intrusion in late July but it took them until late August to close all the entry points and delete the code left by the hackers across 90 different servers. Analysts are still puzzled on how the hackers gained administrative privileges that allowed them access to that many servers. The Treasury Dept and Secret Service have been working with JPM since the hack was discovered to try and track down the perpetrators.

Here is the challenge nobody is talking about. If they had administrative privileges they could have deleted every file on the servers forcing JP Morgan to reload backups and rebuild databases. Even worse, instead of deleting the files they could have simply modified the information in every record and the changes might not have been apparent for days or weeks and could have been propagated into the daily backups making them worthless as well. Changing email addresses, street addresses, etc, would make the records worthless and things like bank statements, updated credit cards, etc, would have been mailed to the wrong addresses and cause all kinds of problems. Having to get in touch with 76 million customers and have them correct their information on file would be an insurmountable task. Basically, with administrative access they could have caused JPM and the other nine banks significant amounts of grief that could have taken years to correct. NYT article here

If you have recently been turned down for a mortgage loan don't feel too bad. Ben Bernanke revealed in an appearance on Thursday that he was recently turned down for a loan to refinance his house. In the interview he told Mark Zandi he was "unsuccessful" in trying to refinance his mortgage. When the audience laughed he said, "I am not making this up. I think it is entirely possible that lenders have gone a little bit too far on mortgage credit conditions."

He bought his house in 2004 with two loans with one of them an ARM. The five year ARM was scheduled to adjust higher in 2009 and he refinanced his mortgage of $685,000 into a new loan. In Sept 2011 he refinanced again with a 30-year at 4.25%. He did not say why he was refinancing again or for how much only that he was turned down. With the iron clad qualification rules today he had two strikes against him. He recently left his job of 8 years so a lender could not verify employment. Since his main form of income is speaking engagements where he gets $50,000 for an hour of work he is now self employed and that requires two years of history and more stringent credit guidelines. He also received more than $1 million for a book deal with publisher W.W. Norton. I am sure Bernanke is credit worthy but the current mortgage application process has been called the equivalent of a "financial colonoscopy."

Markets

A +200 point rally is normally a good thing but under some conditions it is not enough. The market was significantly oversold and given the depth of the drop on Thursday to 16,675 you would have expected a stronger bounce. This would be especially true since traders should have wanted to close short positions before the weekend. Friday was a short squeeze that halted at downtrend resistance on all the major indexes.




The Russell 2000 decline to 1,078 and -10.7% from its 1,208 high on July 3rd was much sharper than the declines in the big cap indexes. If the rebound on Friday had legs we should have seen the Russell post larger percentage gains than the big caps. That did not happen with a +0.76% rebound compared to +1.24% on the Dow, +1.11% on the S&P and a whopping +2.12% spike on the Dow Transports.

Also, the Russell rebound was strictly a short squeeze. The Russell gapped open to 1,106 and closed at 1,105. The late morning creep higher to 1,109 evaporated almost immediately while the Dow and S&P actually rose in the afternoon. If the small caps are going to continue to lead you would have wanted them to climb into the close.

The S&P broke through multiple support levels to hit 1,926 on Thursday. The rebound recovered 41 points to 1,967. That is still well below the prior support, now resistance, at 1,980. The S&P did retest the bottom of the uptend channel I diagrammed last week. In theory this was a perfect retest of the long term trend because the low was right to that long term support and the rebound was immediate as in each of the last several tests. That also corresponds to the support of the 150 day average at 1,928. However, if these levels are tested again and do not hold it would suggest a much lower low and longer period of contraction.



The Dow plunged to 16,674 on Thursday and rebounded back over 17,008 on Friday. Despite that +334 point rebound it still finished the week with a -103 point loss. I would be thrilled if the rebound continued but it would encounter strong resistance again at 17,150.

The Dow was helped by monster gains in Goldman Sachs of +$5 and $2 gains in Visa, Boeing and IBM. Only one stock was negative and that was Caterpillar.

The only moving average that counts on the Dow is the 200-day currently at 16,578. That average has halted every dip over the last two years. Since the decline stopped about 100 points shy of that level we could see some further weakness. It is not mandatory but the risk is there.

Interim support is 16,800 with resistance 17,150.




The Nasdaq chart is still bearish with strong resistance at 4,485 and 4,510. The decline to 4,367 was intraday with a return to a positive close on Thursday. The rebound was led by the Nasdaq big caps. The payroll report caused a short squeeze on Friday with the opening high at 4,471 and the close at 4,474. That is a text book short squeeze pattern with no follow through.

I will remain bearish on the Nasdaq until it moves back over 4,510. A further decline to 4,344 would be buyable.



The Nasdaq 100 ($NDX) was my canary for the market last week and the support at 4,000. When that level broke I thought we would see a bigger drop. The NDX panic low on Thursday at 3,934 was instantly bought and the index rebounded to close the day with a gain but with a second consecutive close under 4,000. The 3,885 close appeared to be a negative omen but the short squeeze on Friday overwhelmed the sellers.

However, the NDX, which had been somewhat bullish until last week now has the same bearish chart pattern as the Composite and series of lower highs and lower lows. This is not a good sign for next week and another close under 4,000 would be a strong sell signal.


The Russell declined to levels that produced a rebound over the last year. However, after a 40% gain in 2013 it remains at risk for further profit taking. The 1,087 level was a 10% correction and the 1,082 level was the low on the prior two dips.

On the weekly chart the lower high in August suggests stronger negative bias exists that could push us lower. Any break of that 1,082 support level could prompt a much stronger decline possibly to bear market territory at 965.

The Russell 2000 has declined for five consecutive weeks and the worst streak since August 2011.


The Dow Transports rocketed higher as oil prices declined under $90. The index declined to the long term support of its 100-day average which has been a buy point in each of the last eight dips. Clearly investors bought that dip once again.

However, the transport rebound stopped at the 8,500 resistance level and that is where it will have to start on Monday. There is no room for a running start unless it pulls back at the open to build up some momentum for the next push higher.

The fourth quarter is normally bullish for the transports because of all the air travel around the holidays and the number of packages being shipped. This is a bullish index and could help offset the drag from the Russell 2000.


The NYSE Composite Index briefly traded below support at 10,500 before a lackluster rebound of 0.7%. The NYSE is in the same downward trend as the Russell 2000 and a return dip under 10,500 could be a trigger for an acceleration in selling. The 150-day average that is normally support has failed.


I would like to think the rebound on Friday stalled because traders did not want to go long over the weekend with an abundance of geopolitical headlines possible. Of course what I would "like" to think does not matter. The Russell and the NYSE Composite charts are still negative. Only the big cap indexes like the Dow and Nasdaq 100 still retain any bullish points.

The afternoon stall worries me and that could suggest another move lower on Monday. Whether it has any legs is the big question. At this point heading into the earnings cycle we could see the dip buyers turn aggressive and short circuit any major declines.

Random Thoughts

We are three weeks away from the end of QE and the current market weakness is probably related to that event although market commentators are not yet focused on it. The strong jobs report is just one more reason the Fed will have to modify their forward guidance at the October 28th meeting. Bullard said there is no way the Fed can not alter guidance, which means they have to get rid of the considerable period language and start suggesting the first rate hike will be in March instead of June. The end of every QE program has brought significant market declines. Why would this time be different? The market has now gone 1,100 days without a 10% correction. Fun times ahead!

The end of QE1 in 2010 caused a -13.2% decline in the S&P. QE2 ended in 2011 and the market declined -18% over the next three months.


Mario Draghi and the ECB failed to live up to expectations when they met last week. The tough talk by Draghi is no longer having any impact on the market and the declining European economy is going to be a drag on the world. This had one commentator saying Mario was Draghi-ing on the market.

Common is rotten to the Core. The vast majority of people reading this newsletter probably learned to add and subtract in math class by borrowing and carrying numbers. It was simple and quick and we all do it even to this day. However, that system is no longer taught or accepted in schools using the Common Core curriculum. This link is for everyone that does not understand why parents are so up in arms over Common Core. Can you subtract 38 from 325? This is how third graders are being taught to do this. Picture worth 1000 words

Inflation in Venezuela hit 63% last week with the bolivar currency exchange rate at 100 to $1 except you can't actually exchange them except on the black market. President Maduro continues to blame the "capitalist economic war" on the U.S. but he still accepts our dollars for the one million barrels of oil we buy from him every day. Airlines have quit flying there because the government won't give them the money paid for the fares and there is no jet fuel to refuel the planes.

In Iraq the ISIS army is on the move with the capture of two more cities close to Baghdad. It is only a matter of time before Baghdad itself is captured. Iraqi troops are melting into the desert to avoid confrontations with the ISIS army. A large number of Shiite civilians have been conscripted and armed to help defend Baghdad against the coming attack. However, there is no way to really defend against an army of suicide bombers that are willing to drive trucks filled with explosives into critical checkpoints and defense positions.

The $2 billion U.S. Embassy has 1,300 soldiers and special operations forces on hand for protection but once ISIS secures the outer edges of Baghdad they can lob artillery and mortar fire into the embassy at will. There is a real crisis brewing in Baghdad and a couple bombing strikes a day is not going to solve it. Once inside Baghdad's perimeter and the fighting goes house to house the airstrikes will be even more ineffective. Most of the military strategists in Washington believe time is running out to reinforce Baghdad with boots on the ground OR begin the evacuation of the embassy and all the personnel.

Additional payroll numbers. What is wrong with this picture?

In the last year the working age population rose by 2,278,000.

In the last year the labor force rose by 389,000.

In the last year those "not" in the labor force rose by 1,889,000.

That is a lot of people not working but not included in the unemployment rate. Over 100% of the decline in the unemployment rate over the last year has been from people dropping out of the labor force rather than strength in employment. The labor force increases by 217,000 people per month. We would have to create 217,000 jobs per month for the unemployment rate to remain flat. It is declining because fewer people are looking for jobs.

The Association of American Railroads (AAR) reported U.S. rail traffic for September was up significantly. Railroads originated 1,190,431 carloads in September, up +2.7% or 30,837 carloads over the same period in 2013. This was the seventh consecutive month of year-over-year gains and something that has not happened since early 2011. Intermodal traffic totaled 1,073,042 containers, up +4.5% or 45,803 units. The last three weeks of September were the three highest volume intermodal weeks in history for U.S. railroads. More info here

Q3 earnings are just ahead and with it comes Q4 guidance. That is expected to be rocky because of the sharp rise in the dollar. This impacts sales of products overseas and 50% of the S&P profits come from overseas sales. We can expect plenty of guidance warnings as a result of "currency translation" issues. Estimates for earnings growth for Q3 have declined from about +10% to +6.5% so the bar is not set too high.

A recent survey showed that 72% of Americans believe we are still in a recession. Wage growth over the last five years has been nonexistent and in many cases has declined because of the large number of workers competing for too few jobs. Home prices have not risen over mortgage balances in many areas and have trapped consumers in their existing homes. With one person in ten not working everyone knows somebody that is out of work. When a new McDonalds opens and gets 1,800 applicants for 40 positions you know the job market is tight.

The biggest fat finger trade ever happened in Tokyo last week. The trade resulted in orders for $617 billion in stock being cancelled. Shares in 42 major Japanese companies were hit by the error. The biggest single order was for 1.96 billion shares of Toyota worth 12.68 trillion yen. The trader initiating the bogus trade was not identified.

Pyongyang North Korea was said to be under lockdown as rumors swirled about a coup. Kim Jong-un has not been seen in public since September 3rd. Supposedly he is ill and some believe he has gout, diabetes and lung problems. Reportedly the Organization and Guidance Department (OGD) has stopped taking orders from Kim and are running the country. This is not a big change since they normally run the country anyway with little input from the figurehead in charge. However, it seems Kim may have overstepped his authority and has been cut out of the loop. There are so many rumors it is tough to know what is real.

With crude prices falling to less than $90 gasoline prices are plunging. The average price in the U.S. fell to $3.33 on Thursday and a four year low for this time of year. Gasoline prices are expected to decline to $3 or less in the coming weeks.

On the bright side October is normally the month where the market rebounds into year end. Market lows are typically made in October and rebounds then push it higher. October is known as the bear killer month because so many bear markets end in October.

Only 81 shopping days until Christmas.

Enter passively and exit aggressively!

Jim Brown

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"What's money? A man is a success if he gets up in the morning and goes to bed at night and in between does what he wants to do."

Bob Dylan