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Use Caution With Conflicting Market Signals


Tech stocks are once again set to open higher, but will this be an excuse to sell or buy?


Good morning, Minyans,

We continue to be stuck in vacuum where we have a wide range of opinions and theories going forward. The charts are saying we should be very careful as the S&P flirts with a key level after last Friday's significant sell off. Furthermore, stunning earnings from the likes of tech giants like Apple (AAPL) and Google (GOOG) have not created such a "high tide to lift all boats" as indicated by very narrow leadership and sympathy plays, such as semis taking a severe beating.

On the other hand investor sentiment continues to drop with the latest AAII readings indicating the bears trumping the bulls 48.21% to 31.25% and money market flows hitting new highs.

Last night, Microsoft (MSFT) impressed the market with a fantastic quarter and the stock is trading higher by over 10% in pre-market. Tech stocks are once again set to open higher, but will this be an excuse to sell or buy?

All of the information is enough to give a trader paralysis by analysis and that is exactly the camp I find myself in. Rather than trying to guess or predict where we go from here, I have adopted patience and caution.

I have high cash levels and am building two long lists that I will work from over the next two months. The first is a list of earnings winning stocks I desire to own such as Abaxis (ABAX) or Foundry Networks (FDRY) while the other list is comprised of stocks that look vulnerable and ripe for longer term shorts such as Mattson Technology (MTSN) or Gulfport Energy (GPOR).

It is far too early to tell so as others battle it out, I will sit back and wait. Don't feel pressured to do anything at this juncture, but rather sit back and allow others to do the heavy lifting. When the time comes you will be able to move quickly and participate. Being overly anticipatory has proven to be very dangerous in this market and there is no reason for it.
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Position in ABAX.

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