Stocks fall on heavier trade…showing September weakness.

Starting on the first Friday of the month the market started to show signs of being tired. The most recent rally was on much lower volume as it progressed volume subsided. Although stocks showed resiliency Tuesday, sellers came in and unloaded. Wednesday and Thursday gave us our first two distribution days of the rally. Both the Nasdaq and S&P are now with 2 distribution days. For the week, S&P 500 ended down .92%, Nasdaq slid 1.25%, and the NYSE composite index lead the charge down 1.67%. Not surprising for September to be in negative territory.

Looking at the S&P 500, I’m looking at the 1286 level to be held. It is the near term support level, it appears the market will try to retest lows. Friday’s weak rally off the past two distribution days is signaling that further downward pressure remains.

Wanted to take a moment and remember all those who lost their lives on September 11, 2001. I remember the day vividly and remember the range of emotions I felt, sadness to anger. It is now 5 years later, we’ve killed many of those who would love the chance to kill Americans. There is still that “GUY” left out there…no doubt we’ll get him at some point. He is hiding in the Mountains of Pakistan, he has no access to anything other than dirt and rock. For all we know he could be captured at this point, being interrogated. What we need to remember is that WE as Americans had ancestors who fought before us, for our way of life. Go out, fly, travel and enjoy life. Be vigilant, be alert if someone wants to take over a plane, bus, train turn into a civilian warrior. We need all of you, all Americans to take over anyone who threatens our way of living, our lives. May those who are taking the fight to those who want us dead, may security, and safe travel home find you.

I want to share a story with you. Friday night I heard one of the most interesting stories about Iraq. I met a gentlemen who was station and in charge of bringing prisoners to Abu Grab. He told me, within the prison all of the inmates were moved and lived to the front of the prison. The front of the prison was where the only road passed by the prison. Periodically, insurgents, freedom fighters for the liberal crowd would drive by in pickup trucks with mortar rounds. Thump, Thump mortar rounds would be launched from the beds of the pickups…the only problem is that the road was too far away for the rounds. Therefore, these rounds launched from the road would hit where all the prisoners were. Only prisoners were being killed. In addition to this, in some parts of where troops were stationed more mortars were fired however, the mortars would fly too far. Up and over these mortar rounds would go. The problem is that these insurgents have “NO CLUE” how to fire any weapons they have. It was an interesting conversation.

I still believe the path of least resistance remains flat. We have had a rally on impressive volume since Aug. 15th. I’d like us to retest lows only to reverse highs on volume. Any new buys should be real small, keep tight a cut loss strategy. Look for strength to come with volume and weakness on falling volume. If we see more distribution days, start taking positions off the table and keep in cash.

Best of luck and I’ll see you at Investors Paradise!

MktSpec