Weekly Commentary

September 1, 2010

The equity markets continue to grind sideways, and as each day passes lower trading volumes seesaw the markets up and down; though the trend for August remains decidedly negative. The S&P 500 has been range bound between the 1045 and 1065 levels for over a week, with market participants failing to force the markets into a meaningful trend, positive or negative. As we move forward we continue to monitor the trading environment for any substantial changes, however the 1040 technical support we have mentioned in previous commentaries remains a focal point for the market. Until some catalyst gives the markets a bearing to decide what direction to go, we will likely continue to see this range trading pattern. Once we see the markets begin to move, it may go quickly, especially if the move is to the downside. With market volumes at such historical lows, it seems that a large down move is much more likely than a quick large up move; but we don't speculate, we simply follow our time tested model. With the Stadion trend indicators continuing to deteriorate, and market breadth signaling a high risk investing environment, we continue to position our portfolios defensively in cash and fixed income ETFs. Until a strong positive trend is established we will remain in our current allocations, and wait to return to the equity markets when there is a higher probability of positive price performance. - SMM-082010-188

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