Small Caps Lead

The good news is that the Small Caps are leading. The bad news is that small caps are leading. While it's good that the Small Caps demonstrate speculative fervor in the market, coming late in a rally often signals signs of a blow-off top. The problem is trying to time how far the blow-off top can run. Blow-offs are usually the most juicy part of the rally.

We're monitoring the situation closely as to when we would start scaling out of our positions. Again a prudent course of action would be to make partial sales into blow-off strength due to the difficulty in timing when it ends.

The Semi's continue to lag but are in positive territory. The market is one minded in its zeal to move higher despite the underperformance in Semi's and high closing price of oil. We are sticking with our earlier purchases for now and are comfortable with our slightly increased long exposure. Any sudden reversals in the market will probably be met with dip buying as we plan to also participate with our large cash position as well.

In summary our goal is to initiate small sales of our long positions over the next couple of days, however we would also be prepared to add long exposure with our large cash position should the market do a sudden sharp reversal.

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