As much as we hate to say it, this is the exact sort of action we are looking for.    As you  recall from our note yesterday, we cut lose quite a bit and are mostly cash.     Yesterday's late day rebound was a bit puzzling but we stuck with our thesis.     We just didn't like how many of the stocks on our screen are acting lately, looked very tiring with declining volume.  

Where do we go from here?     We'd be patient as we think this pullback is very healthy in the overall scheme but we still do not want to be dancing around in this pullback.     Picks will be extremely selective until this pullback is over and trading horizon will definitely be centered around very short time frame.      The problem with this kind of pullback is that we just don't know how damaging it's going to be to small caps.    When bids disappear, some of these small caps can literally drop in a vacuum like of way.    9 ema is meaningless when the mkt is going through a general sell off.     When the mkt is on a firm uptrend, we'd put more weighting into the 9 ema bounce idea.    Right now, all we can do is sit on the side line and keep an eye on what's making a new 52 week high

A couple of stocks do stand out today..     MR and APKT.    In all honesty, we think plays nowadays are only as good as until the end of the trading day.

Be careful out there and protect your capital at all cost.   There's no need to sit in a position that's still "appearing" to hold up.   In our experience, it's probably just a matter of time when the pullback gets to your stock, sooner or later.

cheers,