Remember The First Law Of This Business…

The major indices were extended by any measures and were due to pull back towards
their moving averages. Well, here ya go.

The markets have been overbought for a while. Eventually, that had to be worked
off.

It has been too easy making money on the long side. Too easy always ends.

Everyone is now blaming the Fed. For what? All they did was tell us what they
told us they were going to say last week. Yes, today’s words were already telegraphed.
That leads me to my first law of this business. “It’s not the news…it’s
how the market reacts to the news.” My job is to interpret the reactions.

On top of SEMIS, HOMEBUILDERS and GOLD, you should for the most part be avoiding
CYCLICALS, all METALS, CHINESE ADRs, MEDIA, many RETAILERS and possibly many
FINANCIALS as the perception, just the perception, of higher interest rates
could do damage.

Is the end of the bull move at hand? The permabears will say yes…the permabulls
will say no. I say to play it day by day but the action of the past two days
is less than comforting. As far as statistics goes, there were 330 stocks that
broke below the 50-day average and another 80 stocks that broke the 200. Also
of note is the many blow-ups we are starting to see. I have also been telling
you that 7-8 out of 10 charts were still in good techincal shape.