Technology remains the clear market leader with strength concentrated in fiber optics, semiconductors, data storage, networking, hardware, machinery, and selected medical groups. Energy and Transportation have been notable laggards. At the same time, we have a market that is severely bifurcated. Applying the Cycle Composite concept across the major indexes highlights just how significant the divergences have become. The Nasdaq Composite has deviated considerably from its historical seasonal pattern, while the Dow has tracked its composite more closely. The Russell 2000, meanwhile, has been in a relatively steady downtrend over the past five weeks. The more important message is what is occurring beneath the surface. The average stock has experienced seasonal weakness much closer to the Cycle Composite pattern than the capitalization-weighted S&P 500. RSP, MDY, and IWM remain 5%–7% below their highs, while only 37% of stocks are above their 30-week moving averages, down sharply from 63% in August. This type of narrowing participation and divergence can occur around market tops, although it does not necessarily mean a top is in place. The question is: are we experiencing a stealth correction that is near the end, or a more serious warning. Until breadth and participation improve, we remain patient and highly selective, concentrating on quality stocks displaying strong relative strength and holding key support levels. We continue to hold a small list of longs that have held stops and performed well. Names include: $TWLO, $DE, $MRK, $TEVA, $TGTX, $HTFL - this morning we reduced our $IWM short/hedge and took off our overweight.