European Focus Long

European markets rebounded strongly this week after two
consecutive weeks of losses. Despite some profit-taking on
Friday, the markets closed 2.4% higher on average. Every
country gained expect for Denmark (-0.7%), a laggard for the
last month. Seven markets, Finland (+3.7%), France (+3.6%), the
Netherlands (+3.5%), Germany (+3.4%), Austria (+3.3%), the
U.K. (+3.1%), and Norway (+3.0%), were up more than 3%. It
is encouraging to see the largest markets outperforming in the
rally. Ireland, up 0.5%, was the only country besides Denmark to
gain less than 1%.

Global Focus Emerging Long

Chinese markets rallied over 1% each this week, bouncing back but
remaining within consolidation since late July. Action continues to be
constructive holding above or near moving averages, but remains
in a ‘neutral area’ where markets have yet to decide which direction
to move in. Volume was light this week and no distribution was
recorded. Going forward, we are looking to see whether markets can
break above previous highs of approximately 2060 for the Shenzhen
and 3140 for the Shanghai. In our view, a strong move above these
levels would be a bullish indicator. Vice versa, a move lower along with
increasing distribution to approximately 2,950 for the Shenzhen and
2,930 for the Shanghai would be concerning.

US Focus Long

U.S. indices were able to rally back this week after last week’s sell-off. The Nasdaq is clearly
outperforming the S&P 500, aided by AAPL and the Technology sector which is once again
testing year-to-date highs. Though this is encouraging, it is still not enough to shift the
market back into a Confirmed Uptrend. All other sectors remain depressed from last Friday’s
severe price break. Market breadth will need to improve after next week’s Fed decision
in order for the market uptrend to resume. We continue to believe a cautious approach is
warranted given the volatility in the current marketplace. We remain in an Uptrend Under
Pressure with seven distribution days on the S&P 500 and four on the Nasdaq.

European Focus Long

Losses accelerated this week in Europe as markets closed lower,
2.5% on average, after declining 0.9% the prior week. The
last time the markets had two consecutive weekly losses was in
June. Every market lost at least 1% except for Denmark, the
only country to close positively, up 1.5%. Two markets, Portugal
(-4.6%) and Spain (-4.3%), lost more than 4%, while Italy (-5.2%)
was the worst performing market with a loss greater than 5%.

Global Focus Emerging Long

Chinese markets pulled back over 2.4% for the short week (markets
closed on Thursday and Friday). A distribution day on Monday caused
most of the decline as the Shenzhen and Shanghai fell by 2% on average.
Over the longer term, both indices are trading near moving averages and
have not broken trend, but are Under Pressure with 3-4 distribution days.
We continue to look for support to hold and anticipate a volatile market
in the coming week in response to the FOMC decision.

US Focus Long

The S&P 500 picked up back-to-back distribution days to close the week, undercutting the
50-day moving average for the first time since June. The distribution day count rose to six
days on the S&P 500 and three on the Nasdaq, as multiple leadership ideas closed beneath
short-term support levels. The market broke through the lows of this two month long range
and is now set to test the highs from June at 2120. We recommend holding off on initiating
any new positions until we see support come into the major averages and leadership ideas
alike. The market has been shifted to Under Pressure for the first time since the July 8 follow through
day.