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January 2018
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Unemployment and FDIC report kill the rally

                It will be a difficult day for the US stock market if stocks are traded on real economic results.  Another 570 thousand Americans lost their jobs this month.  No matter how you look at it, this number is devastating to the economy.  The exact results are hard to quantify, but one can assume that foreclosures, credit card delinquencies and other financial problems will come from those currently losing their jobs.

                But as bad as the unemployment number was, the FDIC report was much worst.  Over 410 banks are currently in the danger zone of being closed down.  FDIC estimates 2/3 of the banks are insolvent.  More than half of the banks reported revenues.  The FDIC’s revenue fell by 20% from 1 year ago.  Great, this report will surely fuel the rumors of the world wide bank holiday.

                The US dollar is holding strong, only down to the YEN.  The stock market took the bad news better than one would have expected, only swinging negative 80 points within an hour (was negative 40 when I started typing).  The VIX is going vertical with increasing buying of protection.

                Putting all this together, leads us at Alphas Edge to believe the market is about to finally correct it.  Well it, who knows, if Goldman Sachs recommends their top 50 biggest clients to buy, we are heading higher.  But without a doubt, the risk has significantly increased while the reward has significantly decreased.

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