Mr. Market has a very interesting way of making you feel warm and fuzzy, only to bring you back to reality with a 2x4 across the head. Most of the day today, market action remained controlled, as a slight pullback was to be expected after yesterday’s strong move. Unfortunately, breadth remained poor and it was only a matter of time before the selling escalated as investors sought to lock in any of yesterday’s remaining profits. These trades slowly gained momentum all day, leading us into a quick spike down in the closing hour. 

Bottoms are formed through a series of failed bounces and despite today’s sell off we did not break through current support which is a positive sign. Many that were not washed out on the recent failed bounce were surely shaken with today’s ugly action. That isn’t all bad because it moves stocks from the hands of the uncertain and nervous sellers into the hands of more confident buyers.  

A true bottom can not be formed until many have thrown in the towel and given up. While I am not saying that this is a bottom, as long as we hold support, this action provides good potential for an eventual tradable rally.

We are holding a good amount of long positions and feeling some anxiety due to the market volatility just like you probably are.  While we aren’t inclined to throw in the towel, we are watching very closely and will raise cash should these key technical levels break.

TSP members putting some funds to work today; should receive favorable prices at the end of today’s close. It will be important to monitor the action closely and to take incremental steps, never committing all your capital at once.

We have good news from Google after the close and that should help the market mood tomorrow.  Have a good evening.

RevShark