Wednesday, September 06, 2006

Profit Taking Sets In

The market is under pressure this morning, most likely due to profit taking given the run that we have had. The Nasdaq has been up in 7 of the last 8 days.

Bond yields are moving higher on a report that wage inflation rose a bit (unit labor costs). But at 4.83%, the 10-year is still well below the fed funds rate, and still below the T-bill rate as well.

The semis are down -1.7% so far, but biotechs, homebuilders, and energy stocks are down just as much.

The volatility indexes and put/call ratios are rising, which could put a bid under the market. But the market is also short-term overbought, so some consolidation would be healthy.

I, for one, have raised quite a bit of cash taking profits and would welcome a pullback to put money back to work at lower prices.


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