Equity Market Comment - 6/2/2008

The next leg lower appears to have begun with the decline today.

While there was a late day attempt to curb the damage, it was met with selling and although the DOW does not show the weakness late in the day, the S&P 500 does.

From this point I would look for the S&P to push lower early Tuesday with a potential reversal about mid day that should help the average to close mildy negative to mildly positive. We will need to see the lows of today taken out early in the day in order for this scenario to have high odds of occurring. This final push lower should be met by some buying that will send the market higher, but be not a fool about the intermediate term direction of this market. It is clearly down and if you did not have the opportunity to get aboard for the decline today, then the potential counter trend rally may be yet another opportunity to get short.

I remain very defensive in here as I continue to sell rallies and with my hedges in place on my long term portfolio I currently am holding only a 20% allocation to stocks.

The proceeds from the stocks that I sold outright have been placed in the 10 Year T-Note as we should see the Notes increase in value as equity continue to decline. Not to mention the yield on the T-Notes is much better than the prevailing money market accounts.

Remain very cautious in here.