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Before Thursday's opening bell, the Labor Department reported that US payrolls fell by -62,000 last month which was a sixth consecutive monthly decline. Analysts said that surging energy prices coupled with a slowing economy forced companies to reduce costs. The report also revised May's reading down to -62,000 which was greater than initially reported. The unemployment rate remained steady at +5.5% after jumping in May by the most in two decades. Investors were concerned that job losses, record high energy prices, and tumbling home values will curb economic growth. However, at this point, the economy continues to expand, albeit at a dramatically slower pace then recent years. The market has clearly discounted this slowdown and until the market produces a new follow-through day it is important for investors to remain defensive.  

Earlier this week, a slew of leading stocks got smacked as investors are concerned that a slowing economy will curb demand for industrial goods. The highly influential financial sector continued to get pounded which does not bode well for the major averages. The Philadelphia Semiconductor Index (SOX) is another highly influential sector which is also having a very tough year (see more in the Industry Group Watch section of this evening's CANSLIM.net After Market Update). Interestingly, energy stocks declined on Wednesday even though oil surged to a new all-time high! What does all of this mean for growth investors? Simple, we need to see a new batch of healthy leadership emerge before a new sustained rally can begin. History is littered with such examples, in 1998, tech stocks emerged as a clear area of strength which helped the world recover from the Asian financial crisis. Then in 2000-2005, housing stocks emerged which helped the market recover from the worst bear market in 70 years (2000-2002). Now the financial and housing sectors are in shambles, and one would like to see a new batch of leadership emerge to confirm a new bull market.

Special Note: We would like to wish everyone a very happy and healthy 4th of July! For those of you that are interested, those of us who manage money for a living based on this investment system have our assets (both our clients and our own) completely in cash at the moment. As a result we have markedly outperformed the major averages, the average mutual fund, and a host of other professional money managers during both the first and second quarters of 2008. Assets under management continue to rise at our local branch office due to the fact that we closely adhere to the guidelines of this proven investment system. In essence, we are winning by not losing. Sometimes it is that simple. We currently manage money for both individuals and institutions.  If you are interested in working more closely with us please email: asarhan@sourcegrp.com with a subject: Money Mgmt Inquiry.