Strength in Weakness

Sans France, Europe is down sharply. Oil, gold, silver and bonds are all getting hit, while the dollar rallies. Everything is where you’d expect them to be in an equity sell off, with notable exception to the banks and retail.

RTH, which is the retail holder, is up more than 1% today on broad based strength. The PPT breadth is at 29.8%, almost double yesterday’s reading. Despite the sharp dips in numerous names, some of which belong to me, today’s tape is not all that bad. Moreover, there is a shot for a late day rally.

For the year, so far, I am down about 1%, giving back all recent gains thanks to angry robots and happy go lucky short sellers. Perhaps I am being a little hard-headed, with regards to my long only position. Or, maybe I am just exhibiting patience. It’s possible that we can decline 10-15% from here. Why not? At the same token, I don’t think many would be surprised if we rallied 10%. That’s what makes a market. It’s the struggle between ideologies, coupled with the noise people make through swing and day trading. Add computer based algorithms into the mix and you have pure chaos, organized and controlled by a select few.

Aside from buying TEX, I trimmed back on my FORM and SFLY positions, mainly for cash. Believe you me, I am enjoying my fair share of losses today, led by PH.

Understand that a lot of weak hands are long stocks now. It makes for a messy tape and the cleansing process is never seamless. However, the foundation for future market gains are present, providing the municipal bond crisis doesn’t go “full retard” in Q2. For now, this is your standard, run of the mill, sell off.

UPDATE: I sold all of my NILE, CENX and PWER. Cash position is now 40%.