Focus on market leaders — like GOOG

Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim’s Nightly Stock Analysis

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The S&P 500 found support at its 200-day

moving average
for the time being, but I wouldn’t count on this lasting under the current

Selling, Selling, Selling! This is all we have really seen since the market
topped in late-April for the NASDAQ and early-May for the S&P 500. The attempted
rally from the lows of 5/24 is looking weaker and weaker by the day.
Furthermore, we have very few leading stocks to find hope in. This picture looks
fairly dim, doesn’t it?

Well, the good news is that corrections (drops of 8-10%) and Bear Markets (drops
of 20% or more) don’t usually last very long and I don’t think the current
decline is any different. The market has been rallying in a very steady, but
choppy manner since 2003 and we have been mostly bullish since then through this
column. Now we are bearish to the extent that capital is preserved and held on
the sidelines while the market finds new leadership.

New leaders may be seen in old names like Google
Quote |
Chart |
News |
building new base
patterns, or new names may appear that we have yet to learn about.

In any case, caution is currently warranted as we have a confirmed correction
underway with very little to go after in the way of stocks.