I do not like this market environment and now the indices are breaking down through their respective 50 day moving averages. As stated yesterday, the marginal follow through day on the S&P 500 was suspect to begin with and today’s action is clearly negative. To me, of the leading stocks, two will go up, while three will go down. Some are holding up, but the market is gradually getting around to selling the others one by one. Recently, some long time leaders have not been acting right. Wall Street is now hoping for a QE3, which re-opens the debate about the general state of our economy.


I’ll paraphrase Jesse Livermore in saying, “In some markets not even a skunk could make a scent.” The tone and tenor of this market is vastly different from the first quarter of the year. If you’ve been conducting your daily market analysis, watching the behavior of leading stocks and monitoring the equity in your portfolio, you’re probably coming to the same conclusion. This is only my interpretation. As always, if this market is working for you, that’s more important than anyone’s opinion.


Best Returns,


Scott O'Neil

President, MarketSmith Incorporated