The Best Thing To Do Now…

The market flashed a few
warning signs early this month and has not offered anything bullish since
then.  We saw blatant distribution or selling on above average volume (7/6)
and below average volume in the subsequent consolidation.

 

 

The second glaring negative
is that we have no leadership; on the upside at least.  The Semis seem to be
leading us lower as they managed to undercut their prior lows of 35.63 and
34.50.

 

 

Qualcomm
(QCOM) and Research in Motion (RIMM) seem to be two of the strongest growth
names around, but it is important not to forget that bad markets usually come
and knock down just about every stock.

 

 

Shorting stocks may seem like
an option at this time, but I do not usually take that route because it
carries more risk than simply waiting for a strong uptrend.  Volume is low and
there is no reason, just as we saw in mid-May’s rally that institutions won’t
run in short players.

 

For now, the best thing to do
is wait it out in cash.  There are a few new set-ups occurring, such as Big
Five (BGFV) and Engineered Support (EASI).  If the market does strengthen,
there are names to play, but for now patience is a virtue.