While this market is subject to a strong dead cat bounce at any moment there continues to be degradation under the surface. Just about all the leadership areas of the past month have been hit on a rotational basis. Hence any trend following strategy is now going to be rather useless as relative strength no longer offers assurances of sustained moves up. I mentioned the bond market yesterday and the well followed iShares 20+ Year Treasury Bond (TLT) ETF has this morning broken over the trend line of highs of the past few months. This of course can reverse at any moment but for now it's another cautionary indicator.
As for the S&P 500 it is sitting just above the 50 day moving average for the third day in a row – bulls certainly are attempting to defend that area with great vigor. For now this is the battleground.
Any securities mentioned on this page are not held by the author in his personal portfolio. Securities mentioned may or may not be held by the author in the mutual fund he manages, the Paladin Long Short Fund (PALFX). For a list of the aforementioned fund's holdings at the end of the prior quarter, visit the Paladin Funds website at http://www.paladinfunds.com/holdings/blog