Watching and waiting

The Bears are finally getting some satisfaction. Are the Bulls ready to make a run soon, after allowing the Bears to build up false confidence? We believe not. As we outlined in yesterday's post the low Volatility Index (VIX) will likely drive this decline further than most overanxious bulls would believe. Immature bovine's will likely meet short sellers if they act too soon. More experienced Bulls have learned that lesson the hard way.

The Small Caps are lagging badly which further indicates that it is too early to buy. Other than a little nibbling that we have done on NEM we are maintaining our short-term cautious posture. The challenge for us will be to ignore the first solid attempt by the Bulls. We would prefer to get involved on the long side after at least one or two more serious failures by our Horny friends...can we say that?

Uptrend lines need to be broken in order to create more of a shakeout that would tempt us to be really aggressive with deploying our cash. Again, we are still somewhat net long but are glad that we made the right decision with our recent cautious stance.

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