Here we are talking about portfolio preservation again. After all, it is the number one priority. The reasons we have sell rules and market timing rules is so we can avoid unfavorable environments even when temptation and hope are trying to pull us back in. Admittedly, there were several stocks last week looking very attractive (especially with Technology industry groups or stocks related to the Apple iPad2 announcement).  JDSU, above, is a great example.  But when you are just starting to gain traction and then reverse so abruptly, this is truly a sign of weakness. It’s like a rocket starting to lift off the pad; if it stalls at the start, it’s a very bad sign. It is clear that the reversal we are seeing today is not just day traders. In fact, it appears that today we will log another distribution day on the NASDAQ.

 

Be careful out there,

 

Your MarketSmith Team