Interesting day on Friday. When the dust settled, the Dow and the SPX were on their lows, while the NDX showed relative resillience. Meanwhile, the news was horrendous again, but there was no classic, acute flight-to-safety trade...into bonds or gold or the dollar...that we have become accustomed to seeing since last September.

Very strange, because from an emotional perspective the news makes us feel like all is lost, that the world is coming to an end -- yet the actual price action showed the stock averages down 1%-3%, gold down 0.20%, bonds down 0.70%, and the dollar up 0.50%...on an end-of-month Friday!

My sense both technically and psychologically is that the markets are at or are nearing downside exhaustion. How much more downside attrition there will be, I have no idea, but the next few sessions should provide some answers...at the start of a new month for portfolio managers.

I leave you this evening with a look at the BIG picture of the Semiconductor HLDRs ETF (SMH). We added the position to our model trading portfolio on Thursday at 17, which was 17 points off of the May '08 high and 2 1/2 points off of the Nov '08 low. If we are willing to ride the rollercoaster with the long position, we should be rewarded with a climb to test key bear-market resistance at 19.20/40, and possibly upside continuation to 22.00...AS LONG AS THE 2/24 LOW AT 15.82 REMAINS VIABLE. It might even be worthwhile adding to it into weakness at 16.00 so as "to be there" at the approaching upturn of the semi's, specifically, and the technology sector, in general.

In any event, unless the SMH begins to relinquish its "outperforming" status, this is a sector that begs accumulation ... and a bit of patience, too.