“The market giveth, the market taketh”

Yesterday’s rally appeared to be a follow-through from Monday’s low volume rally, but the market gods had other plans. The trade imbalance widened more than expected suggesting the US’ rising exports did not gain enough to outstrip imports squashing hope on a manufacturing rebound. However, a pull back was to be expected after Tuesday’s gains and the NASDAQ was showing signs of life in the early going. The big story of the day was the conviction of (scumbag) Raj Rajarathnam on all accounts. It was a big win for free marketers, but we are still waiting on Bankers to be convicted of fraud stemming from a decade of exuberance. Despite this being positive news commodities began to sell –off and hard dragging stocks down with them. The market was able to recover somewhat even with CSCO stock reporting in after-hours. Today was a signal all is not right in the stock market and yesterday was more of an illusion than the real thing.

The great thing about our position is we cut our losses when things do not go our way. Many will hold on to dear life only to see their positions crush their portfolios. While there are a few areas of hope, or positive light there is just too much darkness in the market. Yesterday was merely a headfake and now it appears this market is likely to chop and slop and more than likely roll over in the days and weeks to come. It is unfortunate situation as going long is MUCH more fun than shorting or going to cash. But, this is an important time to stay on top of your ready list. Make sure you keep it up to date with stocks displaying positive action and SUPER strong fundamentals. When this market does turn, you’ll want to be on the forefront with cash in hand to take advantage.

CSCO stock popped more than 4% in the early goings after reporting better than expected numbers. But, the strange occurrance was the moot response by the QQQs only being up 6 basis points on the news. Perhaps it was a signal CSCO would not be able to hang onto its initial gap, but the stock (around 5pm EST) is trading down 1%. The stock has been a DOG and continues its laggard status. However, the stock does make up a good portion of the NASDAQ and will affect the index.

It boils down to individual stocks and how they are acting. Are you holding a leader? Are you hoping your stock goes higher (if so, cut it immediately)? This is a great time to be getting to the sidelines before all hell breaks loose. Sell in May and go away is holding true.

Cut your losses!