The afternoon weakness carried into the close with the major averages finishing slightly above their lows on the day. Breadth was nearly 2 to 1 negative however volume was slightly below the previous 2 trading days. Every major sector was in the red and we were troubled to see our resilient semiconductors roll over, finishing lower by 1.7%.

Despite lower oil, the story on the day was interest rates, which sparked a sell off in the early afternoon after what was turning out to be a relatively boring day.  

Regardless of our recent bullish outlook, to disregard today's action would be foolish. The broad sell off despite lower oil causes us to raise our caution levels and were looking at today's close on the QQQQ as a line in the sand. As we scroll through the charts of the stocks we hold, most continue to look good and at this point remains as one of the reasons we continue to feel comfortable with this market.

While the recent weakness doesn't bode well for the daily P&L, we remain with our thesis that we are setting up for a snap higher. Today's sell off definitely rattled any remaining bulls and could be exactly what was needed to set us up for the move we've been looking for. If our thesis fails and the major support levels do not hold, we will not hesitate to move into capital preservation mode very quickly.

RevShark