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April 13, 2014 – Weekend Market Comment

April 13, 2014 – The wrenching sell-off in U.S. high-growth technology and biotech shares could leave investors braced for more than a minor pullback when earnings pick up speed this week. First-quarter earnings estimates have fallen sharply as many companies have blamed the brutal winter for weak outlooks. With high-valuation stocks under pressure, earnings could be subjected to even more investor scrutiny than usual.

Of course if your read my last Market Comment all of this was no surprise, in that posting talked about the rotation by large cap funds from high risk equities toward bands and low beta equities. In other words out with the stocks like bio-tech and in to consumer staples and utilities. All in preparation for a big "Sell in May and go away cycle". Also being where we are in the Presidential cycle it is very likely 2014 will not be as good as 2013.

So the best performer this week was the DOW, followed be the S & P 500 then the Russell2000 and wost performing was the NASDAQ. as you can see the riskier the market the worst this sell off has been. A move into blue chips is one trend emerging after the market's slide, which pushed the Nasdaq down on Friday to close below 4,000 for the first time since February 3. The Nasdaq Composite Index has fallen 4.7 percent for April so far. That means the Nasdaq still has a way to go before slipping into correction mode, which Wall Street defines as a drop of 10 percent from a recent peak. At Friday's close, the Dow Jones industrial average was down 2.6 percent for April so far and the S&P 500 was down 3 percent.
As you can see below the S&P 500 is in a sharp decline. I expect the market to hit the 200 day moving average (see red line at 67.70) :

 The Primary Sell indicator is continuing down. That tells you the smart money is exiting the market.

The VIX shows a spike in fear in the market this week.

How to Play This
Cash would be the best place to be until  we are through this rough spot. Harvest your winners, dump your looser and keep your powder dry until there is another buying opportunity.