Profit taking kicked in today as the major averages sold off across the board.
Early in the day, panic wafted throughout as small cap bids disappeared sending
many into free fall. Rather than stepping in to attempt heroics we didn’t do
much at all today letting the weakness play out. We spent much of the day
researching new ideas and updating the shopping lists as many stocks that were
once extended have now re-entered the atmosphere.

We hope you adhered to our warnings of late and came into today positioned
correctly. We aren’t changing our overall optimistic tone but feel the market
could continue with some weakness considering we don’t foresee any positive
newsflow for some time. We aren’t becoming into all out bears because there
remain hints of bullishness. We were encouraged to see sectors such as oil and
metal week on the day, meaning the profit taking was broad and not
concentrated, furthermore, as with the last sell off when small caps showed
resiliency, the retailers showed life today after a better than expected retail
number which bodes well for them as leaders in the next leg up.

While we may see some bounces tomorrow we anticipate the market to be on shaky
ground. It will be very important to remain patient over the next several
trading days making sure that any strength is not the dead cat kind. A weak
stock that looks good can always get weaker and look better. Be patient and
start updating the watch lists. A better day will come when we can deploy our
capital, but it isn’t today. Stay patient.

Have a good evening.