Its pretty hard to make a case for the long side of things right now. If you are long inclined, there are a couple of silver linings to the dark cloud.
Today's action moved our Slow Momentum indicator to the downside after a couple of flat days. Its not a decisive move but discouraging nonetheless. Moderate and Fast momentum still showed long side gains, although weakening. Since we are still sailing in negative TradeWinds and nearly have of our 40 sectors and indexes are negative as well, you have to believe that short is the way to go. I am a die hard long trader so I look for those silver linings and I think you find them if you look at the 6 month charts of the major indexes. Right now, only the DIA and OEX are really looking ugly with the December and March lows looking like they may be in play. Look at QQQQ, IWM, MDY and even SPY and its not that bad. It looks like just a minor correction after the big run off the March lows. While the DIA is off 7.7% from its recovery high off the March low, MDY is down only 3.6%, QQQQ down 5.5% and IWM down 4%. SPY is the worst of this bunch, but looks like its in a good support spot.
This tells me that its the big caps that have been suffering and the broader market still is basically healthy. How long this divergence will hold is another story, but it does mean it not quite time yet to throw in the towel for the Bulls, although caution is certainly the key word, along with staying away from the big caps.
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