As you know, we have been stating that the market has been narrowing with 40% of the market in not so good shape. We have stated to avoid areas like commodities, energy, retail, biotech, autos transports and recently financials. Financials had not been hit hard but were certainly in the “loss of relative strength” camp. The issue now is the financials are on the edge of breaking the next line of support and so are the transports. This is not good news in a narrowing market.
As far as all the leading areas, many became very extended. Extended EVENTUALLY gets worked off. We shall see if EVENTUALLY is here in the days ahead but leave no doubt, today, they are less extended as just about all are starting to pull in.