I see the identical pattern in 4 charts, so I am cutting back exposure to all 4. These have the makings of companies that could be beginning to break down. If I am wrong, I’ll pay up a slight premium, to regain exposure once the technical pattern improves. The names are different but it’s the same pattern – 4 companies which are breaking down below their 50 day moving averages – unless they quickly reverse back over and above, this could portend a more serious move downward in these issues. I see a lot of other companies who could be approaching a similar set up with another day or two of bad behavior – i.e. we could have a lot of charts rolling over; so despite the tepid bounce back in the indexes (which we said in the weekly roundup would not be surprising as nothing goes straight down), I am seeing some things I do not like in individual charts.

1. Mosaic (MOS) reduced to 1.2% exposure (from 2.2%)
2. CF Industries (CF) reduced to 0.6% exposure (from 1.2%)
3. Gafisa (GFA) reduced to 0.8% exposure (from 2.0%)
4. Ctrip.com (CTRP) reduce to 0.7% exposure (from 1.3%)

The first 3 names closed below this key level today; whereas the latter has been below for about a week, but since it bounced a bit today I am using that as an opportunity to cut since I missed doing so on the initial breakdown.

These moves take another 3.3% away from long exposure and into cash. Although a bounce was expected in the indexes as (a) the market lost 3.5% last week which is huge for an index and (b) the S&P 500 is now at a key long term support level, the 50 day moving average of 1377 – I continue to be cautious in the mid term, although hazarding a guess of the day to day action is a fool’s game. But I’m going to let the individual charts tell me the story; these 4 have turned (perhaps temporarily) for the worse, and quite a few others I see with potential to follow suit. I’ll show the charts below

Long all names mentioned in fund; long Mosaic in personal account

Do….

we….

look….

familiar?….

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