Weekend Update

The equity markets sit at an important juncture. Consolidation of recent gains have exhibited signs of divergence and deteriorating market breadth. Is it merely the summer doldrums or (as the Wave Theorists would argue) an impending correction? Since we don't trade in anticipation of a trend change (preferring instead to see price confirmation of a trend change), we will remain cautious. Longs have been hedged with covered calls and appropriate stops, and some index shorts (for an overall neutral stance). We will refrain from adding longs except for high-volume break-outs (select healthcare/pharmaceutical issues have shown recent signs of strength).

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