Dear Subscribers:

I know that I have been repetitive about the weak Macro issue and the high probability of the US entering recession but yesterday we saw a clear example of why I have been so insistent on this subject.

The new technical uptrend got hammered after a string of Macro misses from the US economy.

Adding insult to injury, Moody's downgraded a series of spanish banks that added power to the sell off.

The Philly FED Manufactoring Index was the most disturbing, entering firmly into negative territory which indicates economic contraction.

The only positive surprise was the CB Leading Index which bounced back to positive growth thanks to the uptick in building permits. 

Technically we can see that sellers were back in force, showing more power than all the previous up days.

A distribution day was set in the S&P 500, Nasdaq Composite and NYSE putting the current uptrend under pressure.

I'm glad I have been very conservative in our long exposure in this new uptrend.

The market remains filled with land mines. Weak global Macro is bearish but bailout news and central bank intervention is bullish.

This creates a volatile, choppy and news driven environment which is extremely hard to trade.

Capital preservation is key at the moment.

I will become more bullish if:

1. We see a panic sell off that makes that market extremely oversold or/and cheap.

2. We see some powerful monetary intervention (QE3 or the like) and the market monitor confirms that the "strong hands" are powerful buyers.

None of the two conditions has occured as of yet.

Best regards,

                      Victor Riesco