Frazzled flipping to and fro characterized the market Thursday; within a pattern that was outlined as an overall up-down-up pattern (with nuances). I believe that sets us up for more downside, even if there is some hesitancy.

Hesitancy is also an element of of an 'exhaustion phase' that I've described the past two weeks or so as, regardless of nominal new highs in the Indexes, while breadth is unimpressive, one sector after another gets clipped just a bit. One day telecom; another chips; and yet another media. And then we had good news (on the numbers; until you looked at the internals) numbers from major banks, and as no surprise there was some selling into the news.

Bottom line: the market is adhering to the forecast pattern evolution and in this case we think they'll try but possibly fail to hold it together going forward at the same time as the market won't surrender easily barring an event.

The Yield Curve remains crushed in essence; and there is not much debate over how high is high; much of which ignores the internal deterioration and a slew of sector rotational rollovers, that have been masked by a few starts on the upside. Stay nimble and generally defensive.