6/5/06
ATR - End of the Day

The markets closed at their lows on the day and the action throughout was very poor. Breadth in the NASDAQ and NYSE closed nearly 4 1 negative while every major sector ended the day in the red. The semis and small caps were hit especially hard closing down over 3%.

While the early action was to the downside, the selling intensified as Dr. Bernanke spoke and clearly expressed a very hawkish tone, specially negating previous thoughts that a softer employment number would serve as the catalyst for the Fed to pause.

The S&P 500 took out the 1275 support and looks poised to see the 200 day moving average once again.

As we have written several times, the key to this action is flexibility. We cannot find ourselves leaning too far in one direction or another as the character of Mr. Market can obviously change quickly.

While we have seen how quickly our stocks can bounce back, we have also seen on multiple occasions how these same stocks can be punished severely. A better day will come but is becoming quite clear that we still haven't gone through enough pain.

It will be very interesting to see how participants react to today's poor action. Rest up and well see you back here bright and early tomorrow.

Have a good evening.

RevShark