We give credit to market for its consistency recently as it was yet another day of mixed action. Leadership was in Gold, Oil and Semiconductors however breadth remained negative throughout the day with a slight improvement into the close. Select earnings winners faired well and positive action out of Apple (AAPL) and Google (GOOG) took the Qs closer to yearly highs. Despite our desire to see some basing in the Semis (SMH) they kept chugging right along, breaking the short term down trend established earlier this year.

We have some employment data tomorrow morning, which may influence the market as a strong report may create some knee jerk selling, where a weak report just the opposite. The issue with these numbers is they reflect the state of the economy, so should they be strong, while it may give more fire power to the Federal reserve, it does bode well for the economic health. While interest rates remain a big concern for the market, were not inclined to read too much into tomorrows report. The Jobs Report has not been a big market mover recently and we suspect that to be the case once again.

While the action continues to be much improved and the averages all look good, we are starting to become a bit concerned at the sudden emergence of bullish sentiment. Furthermore, as earnings seasons comes into play, were inclined to keep stocks on a tighter leash should the optimism set us up for some sell the news drops.

In summary, we like the action and are participating accordingly but are keeping capital preservation at the top of our priority list. Mr. Market always has a tendency to swing much farther than you expect and while our caution may be early it wont be in vain.

Have a good evening.

RevShark