On Friday the stock market fell sharply despite good earnings reports from Bank of America, Google, and General Electric. In the afternoon news came out that the SEC is investigating Goldman Sachs for selling subprime instruments without disclosing to their buyers that they had an interest in a hedge fund that was shorting them.
A one day market decline does not make a trend. We will have to wait to see what transpires this coming week to make a judgment as to the extent of damage done to the current uptrend. If support levels for our equity holdings are breached we are prepared to sell.
As the week progresses, the market will reveal it’s true strength or reinforce those that have been skeptical about the underpinnings of this bull market. Either way, we are monitoring the situation and are prepared to act if necessary.
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