The September reading was slightly worse than expectations of Wall Street economists surveyed by Reuters who had expected a 0.1 percent decline. 

The coincident index, which gauges current economic trends, remained unchanged in September after rising 0.1 in August.  The lagging index, a measure of past trends in the economy, fell 0.6 percent in September following a 0.1 drop the prior month.  Five of the 10 components that make up the leading indicators index fell in September, led by stock prices, initial jobless claims and the Treasury bond yield curve.  Four other components -- slower deliveries, building permits, money supply, manufacturers' new orders for nondefense capital goods -- rose in September.  Average weekly manufacturing hours remained unchanged last month. 

According to John Mauldin, author of Millennium Wave Online -- a respected (and free) market letter, the bear market need not necessitate further economic downturn.  He puts the argument this way: 

"For new readers, let me once again make an important point: there is no long-term connection between the growth of the stock market and the growth of the economy. As a recent example, the economy grew 373% in the 17 years from the beginning of 1965 to the end of 1981, while the Dow was absolutely flat. From 1981 through 1998 the economy 'only' grew 177%, while the Dow surged over 1000%, or ten times in just 17 years. If you go all the way to the end of 1999, it was up 13 times with a growth less than half that of 1965 through 1981, when the market was flat!" 

Mauldin predicts that the economy will muddle along sideways, rather than dip into further recession. 

In looking at the world's stock exchanges, it is fascinating to note that almost everywhere one sees a pattern whose shape is similar to that of the Dow or S&P or Nasdaq in its general characteristics.  In searching through the whole world today, on finance.yahoo.com, I was only able to locate three stock exchanges with patterns that seemed to diverge.  They are shown below: 

 

 

 

It has dawned on me that each of these three countries are associated with active terrorist movements.  Could it be that their very weak economies are benefitting from the "war on terrorism"?  Perhaps we are even seeing the beginning of a trend. 

For a long time, I have heard how interest rates, inflation and the Consumer Price Index (CPI) are all generally inversely related to stock prices.  Of course, since the current bear market, that relationship seems to have experienced a "phase shift."  However, it is interesting to note how closely interest rates follow inflation, and how they each diverge from the Consumer Price Index.  The three charts below, show these variables plotted back to 1982: 

 

 

 

BioComp Profit Neural Network S&P 500 Futures Contract "MegaSystem" Forecast: 
Tuesday's close: down from Monday's close 
Wednesday's close: down from Tuesday's close 

Nirvana OmniTrader Composite Technical Forecast for the S&P 500 Futures Contract: 
Short-term, aggresssive strategy: down 

Volatility Breakout System, Daily, for S&P Futures Contract:  
Out of the market