Today’s action could be summarized as being a mish mash with a variety of positives and negatives but nothing really dominating.  Breadth remained poor most of the day and we had little upside leadership. We were led lower with Gold and Semis being the laggards which typically are not groups that would be seen together. Small caps acted poorly all day, only to reverse strong as Alan Greenspan spoke about interest rates. Action like this makes for good trading which kept us active today; however as a TSP Talk member being limited to funds, we wouldn’t be doing much.

Many have inquired lately as to the divergence in our overall caution regarding the market and our long exposure in our public portfolio, the Sharkfolio. While this divergence still stands, today’s action helps to clarify the thesis. Often times, while the general market is struggling to find its footing, individual stocks will form favorable chart patterns providing good entry points. This makes for interesting trading as a quicker more nimble individual can often take advantage of these moves and significantly out perform the index.  If we find good charts we are going to buy them and then let the market dictate how we trade them. 

One can not confuse this action with that of investing in mutual funds. When dealing with these larger, longer term vehicles, one must review the overall market environment for investing insight.

While today’s action is a step in the right direction, we still have to give the benefit of the doubt to the bears and remain cautious. The markets technical picture remains damaged as all major indexes are trading below their 50 day moving averages and only the NASDAQ remains above its 200. Damage like this will take time to repair. In trading stocks, I remain focused on earnings winners that have favorable technical setups, but am being opportunistic and keeping my time frame short.

I suspect choppy action like this will continue as we close out the quarter and the typical window dressing occurs. Furthermore, the market should continue to be challenging as earnings season sets in through October.

Have a good evening.

RevShark