3-2-12 Morning Comments

As it appears that momentum could be stalling in the small cap arena. I take note that the Russell 2000 has shown 7 days of distribution in a 25-day look back window. This is a similar condition to April 27, 2010 as the market was topping. Small caps can top well in advance of the larger market so this may mean little at the current time. They can also reenergize themselves. There are many days in recent history where the Russell is closing in the bottom quartile of the daily range. The Russell sits 2.5% above its 10-week moving average. This may be the canary in the coal mine if the Russell fails this level.

In the mean time we have certainly seen a powerful rally and the market may need a rest. We will enter a Power Trend situation on the NASDAQ Market Exposure model on Monay's market close if we do not drop 6.9% before then. I own two stocks KORS and BWLD that I have preselected to be my hunker down positions if the market decides to correct in the near term. These are my best performing as well as my largest positions.