This morning started with a mini rally in the markets which quickly turned around to a decline. I stayed all cash sensing the rally might be a bull trap. Though my concerns were confirmed, I still don’t see enough of a clear picture to take a position either way. The bulls and the bears are in a big fight, with the bears having a slight advantage. It’s been a few days since any major economic numbers surfaced, so perhaps there won’t be a great opportunity until tomorrow when home sales date is due to disappoint with a projected drop of about 5.1%. Should the number be worse it will send tremors throughout the market and precipitate equities lower. Faced with a bleak economic environment, I don’t see investors taking too many risks on the long side. As always though, surprises do happen and the key is to be ready.
Morning update 8/23