Equities finished mixed, in what was a fairly volatile week of trading. With a clear absence of market moving news, stocks struggled to find direction. The major theme was weakness in commodity and high beta tech shares. Meanwhile, strength was actually seen in large cap tech for a change. The strength in large caps stemmed from respectable results from Cisco Systems. More importantly, the networking company's management sounded the most upbeat over business prospects in some time on the conference call. This gave investors confidence that the long awaited IT spending pick-up was finally about to unfold. The strength in large cap tech names also seemed to trigger relative performance in other large cap shares. This allowed the Dow to outperform the Nasdaq Composite and Russell 2000 by a wide margin.

In our trading we closed out one position for nice gains. We took a more defensive posture in our trading, because of uncertainty over interest rates. Our focus turned to industrial metal names as shorts, given that the momentum in the group seemed to be fading. As always, we'll be carrying a number of positions into the week ahead that we remain comfortable with. A recap of our performance for the week (as well as year to date) can be found at:

Much like we have seen over the past three weeks, equities struggled to make much upside progress. Meanwhile, the downside was also limited due to hopes of the Fed stopping their rate hikes. After last Friday's jobs report indicated that wage inflation could become a problem, expectations for two more rate hikes seemed to become largely the consensus. However, with the sharp commodity correction of recent days, the Fed could begin to tone down their hawkish talk a bit. Furthermore, after homebuilding bellwether Toll

Brothers issuing another profit warning, if the Fed moves too fast, it could negatively impact the housing market. With that said, hopefully the Fed will avoid over tightening. If this is how things work out (i.e. the Fed backs off a bit on rates), we believe the stage could be set for a very powerful move to the upside in equities. Until further guidance is provided on the interest rate front, equities will probably continue to remain range-bound. This definitely makes trading more challenging. Therefore, it's probably a good idea to keep cash levels on the high side until some more attractive risk/reward set-ups materialize.

All right then, that's it for this weekend. We hope you have enjoyed this edition of the free weekend report. Until then, good luck in the markets!

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