an tSionna 2.01.10

An update to our chart comments that we made on January 25, 2010.  You can link that article here:  January 25, 2010 .  There was a lot of damage to individual names on Friday that does not really show through the indices.  Technology stocks (and technology related ETFs) were one of the worst performing sectors.  Financials on the other hand seemed to hold up pretty well.  Back of the envelope analysis shows that the S&P 500 ended January down about 3%.  It's down just under 7% from its highs seen on January 19th.   

Stocks seem to be getting over sold enough now to rally.  The most recent action unfortunately is indicative of a rally that is likely to fail at some point on the way up.  We of course do not know what will happen or if a failure for any future rally is in the cards.  That is to us what probability suggests at this time.  Like always we will change that thesis if events warrant such an action.  We will let our money flow indicators be our guide as we try and sniff out the market's clues.  There may be an opportunity for us to begin putting some money on a shorter term basis back in that we have taken out of the market for some of our more aggressive investment categories and to invest some new money in accounts that have recently joined us.  However given the recent nature of the money flows, we have updated our defensive plan across the board and stand ready to take action for clients as always with an eye towards their own unique risk reward profiles. 

We profiled over the weekend how this market may be shifting back towards a trading pattern that we saw in the mid-years of the past decade.  That period saw stocks in general experience rough going at some point during the first part of the year.  If that is the case than it is likely that we are not done with the corrective phase of this market.  We have to be aware that this market is showing a change of character and plan accordingly-not only for defensive measures but also to begin to plan for what might come after that.

*Long ETFS related to Technology stocks, financial stocks in client and personal accounts.  Long ETFs related to the S&P 500 in client accounts.