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Market Update 8/18 - Correction Or Roatation? - What's Ahead

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), QQQ, SPY

In order to keep things in context , here is a link to the last post with my views on the overall market from Aug 5th

Since that time the S & P has come down from 1703 to the present close of 1655 last Friday. A 2.8% decline. As I have mentioned in my recent posts on the market , there are many divergent signals that are being presented. That caused some concern earlier in Aug as to whether my thoughts for a correction were in fact warranted.

The recent close @ 1655 now puts the average below its 50 day MA and may be the start of more weakness. How much & how far. is the 64,000 question. On one hand , the recent weakness in the market has not presented itself with overall mass selling. Rather so far what I have see is a rotation from some of the strongest sectors & stocks to other areas in the market. Look at the action in AAPL & QCOM this past week. FCX has improved , look at the action this past week in CAT. Now it remains to be seen if that rotation will continue & limit the downside or are we going to get a full scale sell off here.

I favor the odds for a full scale correction here. Seasonal weakness and what may be more headlines from the DC crowd as mentioned in earlier commentary may contribute to that downside. Lets not forget the 'tapering" story.

If in fact that occurs my first target for the S & P would be a retest of the June Lows or the 1560 area, or another 6% downside from here.

The markets are always an evolving story, keep in mind these comments are in context with the overall theme that we are in fact in the early stages of a secular bull market. LT holders need to review their portfolios , but other than minor tweaks , its is advised to stay the course. be prepared to put some funds to work if in fact we see that selloff.

CSCO, INTC OHI are three names that may exhibit more weakness but can be added for LT div yield & growth.

I will be updating my holdings" which I have posted here to include some of my favorites by sector.