It never fails how perverse Mr. Market can be. Investors entered today with almost a euphoric attitude after reports that Hurricane Rita didn’t pack the punch many were thinking. I wrote last week that it almost seemed as if by week’s end the market had priced in the Hurricane as a non event after the relief rally we saw on Thursday and Friday which set up a “sell the news” fizzle. This is exactly what transpired today.

 The caution we raised in this morning’s update was warranted and paid off as the market declined most of the afternoon to close roughly flat on the day. Oil reversed course and went from being down over $1 to being up $.27 Breadth also declined steadily as the day wore on.

 We think many today were focused too much on Hurricane Rita and had taken their eyes off the bigger picture. We still have many negatives to contend with at this point and the technical damage that has been done will take some time, and pain to recover. Keep in mind that we are in the prime earnings warning season now but also should see end of the quarter winder dressing to help the bulls later in the week. 

We will stay selective and pick our spots very carefully. We came into today heavily long and are comfortable with the positions as the technicals on many stocks continue to look good. New entries are being found, however time frames are being kept short. We like the way that stocks with favorable chart patterns are acting despite the mixed market action.  Shark Bites like ROS and ICCA look good for trades and we will continue to send new ideas your way.

Keep some capital ready for some plays and be ready to move fast as the market develops. There is likely to be some strong trends emerging soon.

Have a good evening.

 RevShark