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MARKET WRAP UP 09/09/10
After opening up to 1110 within the first several minutes of trading, the S&P 500 saw several whipsaws on the way down to close the day up 0.48% to 1104. Volume remained light in the face of the Jewish holidays this week, and breadth was decent, but far from inspiring. Continuing with an ongoing theme, the broad market has been correcting in time much more than in price. The attempt at a breakout this morning was rather quickly rejected, and we continue to chop and churn along the 1100 level.
The present situation is as neutral as it gets. We are in a broad, multi-month trading range, and we are consolidating near the top of that channel. To presume that this consolidation is automatically bullish or bearish is pure guesswork. Thus, my portfolio has returned to a defensive posture. I have a heavy cash position, yet again, and I am hedged with longs ($CMG, $CTXS, $ROVI, $TQNT) as well as some short exposure (long $SRS).
I am still of the belief that many individual issues, as impressive a run as they have had over the past few weeks, need some time to come in and digest their recent gains. That event would also have the added bonus of providing higher probability entry points for swing traders than the opportunities we are seeing now. Of course, the market has no obligation to make our task easier. We cannot control that. Instead, what can we can control is our risk profile.
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