Update for 01/25/10

The market followed through to the downside in a major way Friday, with major averages slicing through their 50-day moving averages, and it has now retraced back to the levels of November. In a few days wiping out months of gains. This is the type of sharp action that gives me some assurance that a major change in sentiment has taken place, perhaps enough to change the prevailing trend to bearish. In other words, the 10-month rally may be over, and no more new recovery highs, much less all-time highs.

Even if so, I don't think it's out of the question for the major averages to retag their 50-day moving averages. In October of 2007, the S&P bobbed and wove around this average when it began its initial descent. In March of 2009, it sliced through and then 5 sessions later came back to retest and base there. Perhaps we'll see the S&P back at its 50 this Friday. Let's see. For now, I'm keeping the sell-stops on our short positions loose; if the major trend has changed, we want to be reluctant to part with our shorts.

Current Holdings
Ticker	Basis	Closing Price	Perf.	Sell-Stop	Addl Exit Guideline	Chart
SRS	7.61	8.15	+7.1%	7.29	N/A	Chart
MZZ	21.11	22.18	+5.1%	20.49	N/A	Chart