Note:  As I indicated earlier, my friend’s funeral is today.  It is 300 miles away, so I must leave early and depending on time spent with the family will get back either late tonight or tomorrow.  So Wednesday’s Morning Call is iffy right now.  If today’s pin action warrants comment or action and if there is not a Morning Call, then I will be in touch via Subscriber Alert.

Economics

   This Week’s Data

    The Institute for Supply Management’s September nonmanufacturing index was reported at 50.9 versus expectations of 50.0 and August’s reading of 48.4.
    http://mjperry.blogspot.com/2009/10/ism-service-sector-index-highest-since.html

   Other

    As you can probably tell from the links in recent days, I am starting to worry that inflation may be further out in the future than I had originally thought and that we might face additional deflation.  And as you know, I am always concerned about where I can be wrong.  At the moment, deflation is where I could be wrong.  I am not changing our forecast---yet; but this issue is at the forefront of my daily focus.  Following are two more articles on the subject.

    More on deflation (long but a must read):
    http://globaleconomicanalysis.blogspot.com/2009/10/deflation-threat-what-deflation-threat.html

    And this (medium):
    http://www.calculatedriskblog.com/2009/10/ny-feds-dudley-downside-risks-to.html

    Our economy keeps getting more energy efficient (short):
    http://mjperry.blogspot.com/2009/10/energy-efficient-economy.html

    The demise of the dollar (medium, must read(:
    http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

    What banks are doing with their deposits (short):
    http://www.ritholtz.com/blog/2009/10/what-are-banks-doing/

Politics

  Domestic

  International War Against Radical Islam

The Market
    
    Technical

    The DJIA (9599) remains within its up trend off the March lows (9437-11302).  Indeed, last Friday it closed almost on the lower boundary of that trend; thus the bounce yesterday was important if the trend was to stay in tact.  The S&P (1040) traded for the third day below the lower boundary of the March to present up trend.  Normally that would qualify as a successful challenge.  But given the spike yesterday and the fact that the DJIA has stayed within its comparable up trend, if the S&P follows through today and closes above the lower boundary, I will probably score last Thursday’s break as noise.  The VIX sold off, lending support to this position.  Unfortunately, volume was quite low and that is a bit bothersome.   
    http://bespokeinvest.typepad.com/bespoke/2009/10/sp-500-bounces-nicely-off-50day-moving-average.html

    Today is another day for patience.

    The latest from TraderFeed:
    http://traderfeed.blogspot.com/2009/10/two-valuable-tells-for-stock-market.html

   Fundamental
   
     Headlines

    The ISM nonmanufacturing index turned negative investor attitude toward the economy around (see above).  Sentiment was helped by a Goldman Sachs upgrading of the financial sector (financial sector stocks led the market off the March lows and is still considered a leader of this up trend).

    Late in the day, CNBC reported that Obama was considering tax cuts as a means of overcoming the dismal unemployment situation.  Is this the beginning of a Clinton-like turnaround?  I do not think so.  Obama has shown himself to be an ideologue; Clinton just wanted to be loved.  But we can hope.