Still In Portfolio Triage Mode

Random Thoughts

To use an oxymoron, Monday was pretty ugly. For the most part, we saw follow through selling from Friday.

The Ps lost just over 1% for the day. This action puts them all the way back to the bottom of their short-term trading range. Longer-term, they still look pretty good. If you back the chart way out and squint your eyes, they only appears to be taking a breather. Unfortunately, as mentioned often recently, its relative performance is masking what’s truly going on under the surface.

The Quack continued to slide out of its First Thrust formation, losing a percent and change.

The Rusty continued to slide out of a Gatekeeper-ish formation. For the day, it lost nearly 1 ½%. This action is indicative of what happened internally. Things continue to unravel.

Chemicals, which were just peeping up to new highs a few days ago, sold off hard. This action puts them below their recent sideways range.

Consumer Durables sold off hard. They too were just at new highs a few days ago.

The Banks didn’t come unglued but they have pulled all the way back to their prior breakout levels. It’s important for them to hold these levels or higher. Otherwise, it would suggest that the breakout was a fakeout.

Many areas that I have been concerned about such as Manufacturing and Retail sold of hard. This action has them failing at their prior peaks.

Software, Internet, and Drugs continue to slide out of their recent First Thrust formations (email me if you need the pattern or come to Thursday’s chart show and I’ll explain it).

There are too many other weak areas to mention. Just take my word for it, it was another ugly day (duh!).

About the only good news is that the defensive issues continue to hang in there. Energy pulled back a bit but so far, it appears to be just that, a pullback. Utilities ended flat. And, the Foods actually ended higher. The sector rotation from the “go go” stocks to the defensive stocks is concerning.

So what do we do? First, see Monday’s column if you’re not familiar with my pick the best and let the ebb and flow continue your portfolio speech. Next, not much really has changed. Conditions continue to deteriorate. Unfortunately, since they slide faster than they glide, it seems that everything that was set up on the short-side all triggered at once. Therefore, I’m not seeing any new potential shorts. On the long side, once again, other than a defensive issue or two such as the Foods and Energies, there’s not much out there. Considering this, again, unless you’re looking at something that you think can trade contra to the overall market, you might want to sit on your hands and let things shake out a bit. At the risk of preaching, continue to let portfolio ebb and flow guide you. I think we are still in Portfolio Triage mode. See my 03/25/14 column for more on this

Futures are flat pre-market.

Best of luck with your trading today!

Dave