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10/6/2005
An Epic Day in the Market

If an all-seeing eye could write an epic about all the events that influenced the market today, it would be a potboiler that would rival anything ever written. On the counting front, we had new lows in the energies with natural gas down 6%, gas down 4% and crude down 2%. In stocks, we had five-month lows, a change in state from up to down for the year, the longest losing streak of the year and the third day in a row with a 15-point drop from 230 to some point in the close. We had avian flu hysteria,  a speech by the mayor of New York City with some old political news about terrorists arrested, timed to aid the bears, the release of meaningless seasonally adjusted employment claims as more grist for the bears, the breakdown of the German DAX below the round number of 5000 right at the end of the day, (how did they know about the mayor's announcement?), the third orchestrated speech by a Fed governor expressing vigilance about inflation being near the top of the acceptable range and vowing never monetizing inflation (when will the fake doctor join Buffett in changing jobs to pursue something productive rather than performing their staged self-serving set pieces?) And then the news of General Electric's upgraded forecast, good news from a bevy of retailers like Target, American Eagle, Costco and Starbucks that sent their stock up, thereby creating the pilot fish for leading the way up the way they led the way down a few weeks ago.

It was a wild, disruptive day, with a 22-point range ending down a measly third of a percent, with margin calls and stops elected galore, a change of state for the dollar which started the week at close to a 18-month high and then today had one of the five biggest losses for the year. Thus the dollar led all the markets down, and is now ready to lead them up, with added potential energy and friction from those who follow fixed systems. Of course there's much more, the fortunes made and lost, the hopes dashed with stops, the fear of the sleepless night for the longs carrying positions before the always epic employment release tomorrow, which will start another novel.

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