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Tom and Brendan normally discuss big picture topics on the Mullooly Asset Management podcast. However, this week they decided that a market update would be best. The current market volatility is what’s on everybody’s mind.

Markets moved lower at the open today. The Dow Jones Industrial Average was down 360 points just a few minutes after markets opened at 9:30. However, not long after that were down 160 points. 200 point upswings do not materialize out of thin air, so some people saw the 360 drop after the open as a buying opportunity.

The S&P 500 is now down 2% for the year. From the last new high we saw on September 19th, we’re almost down 10%. This morning we touched 1838, down from the September high of 2010.

Typically when the US heads into a recession, the S&P 500 gets chopped in half. That’s the type of market move people get scared about when we see volatility like we’ve seen over the last few weeks. So where are we at right now? By “we”, we mean the United States, the markets, and the economy.

Regarding the economy: despite retail sales numbers from this morning, it’s doing just fine (excluding housing). While the numbers haven’t been anything to write home about so far, they have shown definite growth. Third quarter earnings were expected to be up around 4.6%. The actual number that we’ve seen so far is up over 9%. More and more companies are raising their earnings forecast.

We’ve definitely seen our short term charts get to washed out levels. They haven’t turned back up. Yet. We’ve seen some real changes on some charts and indicators, and have been taking action accordingly. Where we’ve seen real breakdowns on the charts, we have acted and will continue to act.

Don’t forget that this week is option expiration week. Nobody seems to be talking about this, but option expiration week is almost always the most volatile week of the month. Couple that with the current market conditions, and you get something that looks like what we’ve seen so far this week. We’ve seen volatility and that’s caused some real fear and sweat in the market.

Make sure to listen to to this week’s Mullooly Asset Management podcast to hear more from Tom and Brendan.