Communication From ARA MELKONIANS/ Final Update/ Week of September 27, 2010

Good Afternoon Everyone and Happy Friday! The Dow Jones Industrial Average successfully posted its best September in 71 years as it closed with a 47 point loss yesterday. This is the best month for the stock market since April of 2009. The bulls are trying to get a rockin' start to the new month and new quarter early this morning, but have hit some resistance in the last hour.

Personal income for August increased 0.5%, which is greater than the 0.3% increase that had been expected. Income in the prior month increased 0.2%. Spending for September increased 0.4%, which is greater than the 0.3% increase that had been widely expected, but consistent with the 0.4% increase of the prior month. Also consistent with the prior month, core personal consumption expenditures increased 0.1% month-over-month, as expected. Stock markets rallied on the news right out of the gate.

However, helping to smack down the rally was the September ISM Manufacturing Index which slipped to 54.4 from 56.3 in August, but the consensus of experts had called for a reading of 54.8. Construction spending for August actually increased 0.4%, better than the 0.5% decrease that had been widely anticipated after a downwardly revised 1.4% drop in spending during in the prior month.
The final Consumer Sentiment Survey for September from the University of Michigan came in at 68.2, which is up from the 66.6 that had been reported in the preliminary reading and better than the 67.0 that had been widely expected.
As you can see, traders have a lot to digest on a Friday, and first day of the month. Stock markets shot up right out of the gate, dropped back almost to zero (NASDAQ and S&P dropped below the flat line) and then have since recovered to small gain. Look for things to settle down a bit now as traders want to close up their work and get out of town for the weekend.
Enjoy