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MLR - Premarket Pulse September 27, 2012

Stocks continued their selloff on higher volume on the S&P 500 and lower volume on the NASDAQ Composite. The NASDAQ is sittting right on top of its handle breakout of three weeks ago while the S&P 500 has undercut the short consolidaton that preceded the "Fed Thursday" move two weeks ago while remaining above its own handle breakout of three weeks ago. The indexes are, therefore, in a posiition where a bounce would be logical, and we are seeing some of that in this morning's futures action.

European markets sold off hard yesterday but have stabilized today as yields on 10-year Spanish benchmark government bonds rose 22 basis points to 5.93% due to concerns over Catalonia's future as a Spanish region which flared after it announced a snap election. This could lead to breakaway independence for the country's most economically important region. Spanish government set to approve the 2013 budget and an announcement due around 8am ET, when Prime Minister Mariano Rajoy is due to speak at a news conference.

There was some talk emanating from Fed heads Wednesday of QE 3.5, where the Federal Reserve’s next move would be to outright buy Treasurys, most likely at its meeting in early December. This appeared to stem the day's sell-off, despite the fact that all the major market indexes closed in the red.

Soft economic data released this morning, led by a 13.2% decline in durable goods orders confirms the continued weakness that plagues the U.S. economy but keeps QE firmly on the table. Despite this, the futures reaction is slightly to the downside. Investors should watch to see how today's bounce pans out as any further downside in the indexes brings the 50-day moving averages into play at 1409 for the S&P 500 and 3045 for the NASDAQ.

Gold GLD and silver SLV both sold off then recovered with each finding support at their respective 20-day moving averages and closing at the top of their daily trading ranges. Buying the dips in either precious metal seems prudent given central bank quantitative easing action around the globe. As well, given their prior sharp run-ups since mid-August some volatile pullbacks as the metals work off some of this upside momentum and consolidate prior gains is to be expected.

AAPL continued to sell off on above average volume Wednesday that was higher than the selling volume seen in the stock on Tuesday, and this all comes after the stock failed to hold the key $700 price level.

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