Which is the where the market finds itself today; no question the current market environment is ugly, which is likely to worsen before it improves.

(Graphic courtesy of Investors Business Daily)

No analytical methodology brought to bear (sorry, could not resist!) upon the market is perfect; not fundamental analysis, not technical analysis. And while company fundamentals have an important impact on security prices, the market reacts to company fundamentals in different ways at different times. A stock's price reacts 80% of the time to market and sector-related catalysts, with corporate fundamentals and valuation metrics a distant third.

Nonetheless chart action tells all. Chart action reveals the markets' changing dynamics on a real time basis; the collective consciousness of all investors across all time frames. Investors must recognize that there is more to the stock market than fundamental analysis. Stocks begin to break down technically way before it becomes visible to investors who use fundamental metrics. Market psychology is technical analysis; when market psychology turns bearish, more sell signals overtake buy signals, more stocks in a sector begin to lag the market and other sectors.

A reader writes,
"The issue seems to be uncertainty (fear) and how you deal with it in the context of the 'market'..."

During the periodic bouts of weakness in the general markets, I seek the markets' leaders -- which is what I do in all market environments. A leader is a company whose product or service is a leader in its industry, and whose stock is a leader in the market. Of course, even the leaders will be thrashed about but rarely trashed, but as a class, they always will come out from hiding before the markets' sun shines again.

I consult market action, and, during periods of market weakness, seek positive divergences. And vice-versa: negative divergences during periods of market strength. My indicators help to guide my portfolios to the inherent opportunities within the market's stronger-acting groups and sectors. Right now, for example (and obviously), the financials sector of the S&P 500/SPX continues to weigh heavily on the overall index, which reality could change at any moment, so I monitor closely for portents of bullish change.

Speaking of positive divergences, a NB: Whereas the DOW Industrials, S&P 500, and NASDAQ Composite (almost) sell today at a lower low than its March 2008 low, Apple/AAPL sells at a price substantially higher than its March 2008 low. Things change, but this positive divergence showcases Apple/AAPL's relative strength and status as a market leader. The ability to perceive long term investments is far easier than long term investing, for obvious reasons, but one is the doubt, uncertainty, and fear that preys on investors' long term intentions and certitude.

Remember the core objective: building wealth, not trading willy-nilly. You and I seek the best of the best of all available investment opportunities, the creme de la creme, and then (strive to) hold on. Sometimes errors occur, whether by analysis or application (even by me), but those positions are sold, and the cash becomes available for the presumptive new winner.

The markets close (3 hours) early today (Thusday), remain shuttered tomorrow (Friday) for the holiday, and do not re-open until Monday. Thank goodness for small favors! Use the holiday weekend to regain your sense of proportion, catch your breath, and, oh yeah, have fun.