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Back with bear market trends

                Dollar is stronger, commodities is lower and talks of worthless assets starting again.  China’s 7% drop today has clearly taken out some of the markets optimism.  Yet, Chicago PMI came in at 50, better than expected, yet the DJI sold off 50 more basis points.

                For us at Alphas Edge, all these are a clear sign that the market is finally ready to begin the correction that is long overdue.  If the market is rational, we would be retesting the March lows as the Fed begins to unravel some of the programs it put in place to prevent a stock market collapse.  At some point, the economy has to stand on its own pillars or the market will continue to sell even with good news.

                Investors and traders should place close attention to the articles we wrote Saturday and Sunday.  The Saturday article clearly points out the dramatic change of the percentage of the market that was short 1 month ago to how many short positions are held today.  That change clearly indicates that we can expect less buy orders coming from those who need to buy to cover their short positions.  In addition, the Sunday article brings out the point that our financial system is still very fragile and not out of the woods yet.

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