The market gave it up today, as I expected.  I’ve been warning you the past few days that the momentum had left the market and we were stalling out.  We were at the top of the channel range, it was either a break through on volume leading to a crazy melt up or we were going to pull back in an orderly fashion.  As expected we saw the pullback this morning as the dollar jumped a little, Intel $INTC caught a downgrade, and mortgage delinquency rates were pitiful.

I’m looking for a test of the 50 day moving average now which will be found around 107 on the $SPY.  This area is also in confluence with the uptrend channel lower trend line.  A test of the declining 5 day moving average will be crazy important tomorrow, I believe it will fail.  If you have a lot of long exposure watch the action there closely and exit on any weakness.  I will also be looking for very specific short setups on a failure.

I’ve been pounding the table for a few weeks now on the fact that you should be decreasing the time frame on which you hold positions.  The market is obviously in either a consolidation or distribution pattern where breakouts will fail in both directions.  If you have gains in an issue, on either side, take them!  Continuation patterns are failing and will continue to fail until we break from this range.

I pared back more long exposure in my momentum book today cutting loose $CTSH, $CAT, and $GMCR.  I did though add to my position in $TUP.   I’ve built a 21+% cash position now and will look to use some of it down around 107 on the $SPY.  I’m stalking energy and material names, and would love to add a little more to $JCG if the broader market cooperates.

Vegas awaits…..