Market gains have been accompanied by weakening breadth and tentative volume. Relative underperformance in Financials and Small Caps (a flight to the safety of large caps), a declining trend in the McLellan Oscillator, and suggestions of a possible bottoming in the dollar, reinforce the weakeness of this uptrend. Although the trend remains up, the reward/risk ratio is unfavorable at these levels. We are focusing on large caps and mutual funds/ETF's with a more conservative bias, and hedging with partial shorts.
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