Straight Talk

OK - here is the straight talk - the market is in trouble. There are very few industries which warrant the risk of establishing new positions. Currently, the only possibilities for new longs are in the tech arena - specifically computers (DELL, HPQ) and semiconductor equipment (LRCX, KLAC, CYMI and BRKS). However, given this climate, the only side of the ball we are playing as of July 30th is the short side. On the next bounce, which will occur early this week, we will establish short positions in at least one more financial - most likely JPM. There are too many other industries from which to choose shorts, and hopefully the picture will clear up as the week develops.

The big problem we have now is that all of the Bullish Percent charts are signaling Bear. The only industry/indices not in Bear Mode are as follows:

S&P Information Technology, NASDAQ Composite.

Take your pick on the rest of the market - everything from Financials to Consumer Staples, they are all primed for shorts - even Energy (Oils, etc.).

For those who need a primer on the Bullish Percent Charts, I strongly recommend picking up Thomas Dorsey's book on Point and Figure Charting.