Editor's Note:

Almost nothing has changed for us in the last week except that the market's major indices have extended their weekly losses to three in a row. There is still no leadership and financials continue to sink. It seems that more and more the economic data is suggesting the U.S. economy is slowing down. While on one hand it will keep the Federal Reserve on the sidelines and could fuel the need for even more stimulus. On the other hand a slowing economy does not mean healthy earnings numbers, which impacts stock prices.

We have know about the end of QE2 for a long time but investors are still confused about what that might mean for the market and the economy. I am suggesting that investors stay in a defensive posture. We do not need to be in a rush to open new long-term bullish positions. Why buy stocks now when we might get a better entry point in a couple of weeks or a month from now. The market's long-term trend is still up but the short-term trend (last three weeks) is a bearish one.

In this environment we need to be cautious when adding new trades. I'm not adding any new candidates tonight but we did include two new candidates with a buy-the-dip entry point on our watch list.