Two In One Week

We've now had two days out of the last five where the market has experienced a pretty decent sell-off.  Friday's action was classic sell the news off of Intel's earnings.  Intel's earnings were good but they were also the numbers that the market was expecting.  This sell the news action set in a bout of profit taking from which stocks-in the face of a long weekend-could not recover.

Since last summer the market has reboounded pretty well from days like this.  Two poor days in the course of a week though is starting to give me some room to pause, especially in light of how far stocks have traveled since November.  Nobody of course knows the answer of where the market will go.  We can at best make guesstimates based on history and probability.  From such experience the Playbook is formed and last weeks market action means in the Playbook we need to be ready to become more defensive if we see more of this weakness in the coming week which also begins the meat of the earnings season.  Stocks are still overbought which is another reason for us to be a bit more vigilent at this juncture.