an tSionna {10.20.10}

{You can double click on this chart to make it larger.}

Yesterday was one of the first negative days for stocks in a long time. Stocks are now a slave to the dollar -meaning that stocks are basically going in the opposite direction of the greenback. Yesterday the buck had a nice rally. Its rise, still more negative news out of the financial sector regarding mortgages, and what were perceived as slightly disappointing earnings news out of Apple and IBM meant for a down day. Perhaps in the end though it was just an excuse for traders to sell and lock in some profits. It's possible that stocks would have sold off like this one day this week in any event.

Hard to say whether this is the beginning of something more drastic. As we've mentioned before there are some strong institutional reasons for stocks to do well going into the end of the year.

Due to that end of the year bias, it's possible that stocks could just churn around for a bit while working off their over bought conditions instead of experiencing a larger sell off. I think the elections are going to be an excuse for some sort of consolidation now before resuming their upward climb later in the year. I'm going to go into that a bit more in a more detailed post soon.

Regarding market direction we will let our indicators guide us and right now they are still very over bought. In appropriate accounts and investment strategies we took off another level of risk yesterday. That still leaves us very exposed to equity price increases but does increase our hedge posture {via cash} in a more uncertain time of the year.

*Long ETFs related to the S&P 500 in client accounts. Long Apple in two client accounts per their request. Please note that I stated that only one client owned Apple yesterday. That is an error on my part. Long Apple and IBM as components of various ETFs we own in client accounts.