Market Sell Off No Technical Damage Yet

The current market sell-off is what I predicted for the last couple of months on the weekly Saturday Show. It has little to do with interest rates, bond yields, or the Federal Reserve. Notice I said “little to do” and not “nothing to do”. Let me explain.
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Earnings Growth Slowing As Interest Rates Rise

With Q3 earnings season in the rear-view mirror, we can now say that earnings growth is slowing. Over the last 4 quarters we have growth rates of: 2.1%, 6.5%, 6.5%, and 4.1%.
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How Much Has the Federal Reserve Reduced Its Balance Sheet

The MBS portion of balance sheet normalization appears to be missing from the current balance sheet reduction numbers. Is something wicked in the economy giving the Federal Reserve pause?

The Federal Reserve said at its September 20, 2017 meeting that the QE unwind would begin on October 1, 2017. Traders have been following this story closely because many in the alternative news sphere that sell ads for things like Bitcoin, gold, and doomsday prepper products, have stated that the Federal Reserve can’t reduce its balance sheet and that reduction is just a lie.
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Of Course Democrats Want Huge Tax Increases

Of course Democrats want huge tax increases. Tax increases cause expanding deadweight loss and ultimately contract economic growth. Democrats clearly want to crash the economy while President Trump is in office to make sure that he’s a one-term President only.

President Trump pushed out on Twitter today that congressional Democrats “want MASSIVE tax increases & soft, crime producing borders.” The President said that Republicans, instead, advocate “the biggest tax cut in history & the WALL.”
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Biotechnology Stocks Look Ripe For Pullback Before EOM

Biotechnology stocks look ready to pullback after rallying 11% since August 21, 2017. The key support level to watch on IBB is 329.

Biotechnology Stocks

Biotechnology stocks ETF IBB looks a bit toppy.

Notice how our favorite swing trading indicator the PPO shows falling histogram bars (red arrow). The falling PPO suggests IBB will likely retest its 329 support level within the next week. We might see a chop out to slightly higher move and then a break down through the 329 support level before the end of September.

Don’t buy the biotechnology stocks hype on mainstream financial websites like Seeking Alpha, MarketWatch, and Daily Reckoning.

I would not go long biotech stocks right now and would NOT take Tarun Chandra’s advice on SeekingAlpha here.

Also watch out for MarketWatch who awarded Greg Guenthner their “Call of the Day” because he wrote here:

Bottom line: the late-summer fade is finished. Biotech stocks are ready to finally put the finishing touches on a months-long quest to reassert the sector as a true market leader.

I like trading biotechnology stocks. Biotechs have the best catalysts of any sector and I did a stock trading lesson on finding catalysts here. What I don’t like about biotech stocks is a strategy that involves chasing them higher. Chasing high-beta biotechs is stock trading suicide IMO. Wait for the September (worst month of the year for stocks) dip that usually comes towards the end of the month before taking a long entry in biotech stocks.