Wait for the bounce not the support.

The NAZZ closed near the 2190 level that we identified as key support in our morning post. This close near the lows of the day is what we were positioned for. This is also exactly what the Bears wanted to see.

Key sectors such as Semi's, Retailers, & Small Caps had very poor action. Breadth was lousy, however volume was slightly lighter than yesterday. MSFT continued to buck the trend which has two implications. Should MSFT succumb to selling pressure, the overall market pullback will definitely intensify. On the other hand, the outperformance of this gorilla, we believe is signaling an increasingly positive fundamental undertone within the tech sector.

With the Volatility Index (VIX) near historic lows, the nature of this market has been that once a trend is established, it continues relentlessly. Traditional inflection points such as support levels seem to not matter as much as they used to when the VIX was higher. Therefore, it is more important to observe the quality of the bounce when it occurs than to try to predict from where it occurs. For this reason, we will let the Bears act relentlessly if they choose to do so. We will wait for the Bulls to demonstrate a "quality" bounce before we get aggressively long.

If You Held A Taser(DDZZZT) To Our Head: We will slowly scale into small select positions at support levels. We will not buy aggressively until we can observe the quality of the bounce.

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