To get a full copy of this report and a Complimentary Special Report from Wall Street Sector Selector, click here:

This week I felt like Henny Penny in the classic story, Chicken Little, the nervous chicken that ran around warning, "the sky is falling, the sky is falling." But with revolution in the Middle East, Europe slipping farther into insolvency and the devastating earthquake, tsunami and nuclear meltdown in Japan, truly the sky does seem to be falling.

At Wall Street Sector Selector, our portfolios remain in the defensive mode as we continue our work of seeking profits in both up and down markets.

On My Radar

This week's fundamentals were horrific, of course, and the technical indicators were no better.

chart courtesy of http://www.stockcharts.com

On the S&P 500 Point and Figure Chart above, we get the best picture of the current situation, in my opinion, with the index in a column of Os, showing supply in control, and the columns resting right at the 1304 level which, if broken, would be a double bottom breakdown, or "sell" signal. Most tellingly on this chart, a break below 1304 leads to a vacuum until the 1220, 1210, 1200, and 1180 levels before any support is found. 1304 to 1220 is approximately 80 points or 6% from current levels.

The View From 35,000 Feet

As we touched on earlier, the "Facebook Revolutions" continue in the Middle East, and in the fast moving Libyan civil war, it looks like the government is regaining the upper hand while the Arab world now calls on NATO to establish a "no fly zone." However this turns out, it seems clear that oil supplies and production will be impacted for quite sometime to come and that this will be particularly difficult for Europe as much of their oil comes from the now damaged Libyan petroleum infrastructure.

The Saudi "day of rage" on Friday was a bust, while protests continued in several of the smaller states along the Mediterranean. Across the Mediterranean in the Eurozone, the pesky problem of too much debt and shaky banks continued dodging Dr. Merkel and her colleagues as Moody's downgraded Spain to Aa2 with a negative outlook, and Ireland continued tottering on the brink of disaster. It's hard to see a way out for the Continent, particularly with negative GDP in Britain last quarter and Brent crude now well north of $110/bbl.

The demonstrations in Wisconsin made for good television news, but receiving less notice were the startling facts revealed by TrimTabs that one third of wages and income in the United States comes from some form of government largesse in the form of Social Security, Medicare, Medicaid and unemployment insurance, while the Financial Times reported that a full 20% of Americans can now qualify for food stamps. This is a shocking statistic because to qualify for the $130 a month food stamp allotment, you have to be below the federal poverty line, have less than $2,000 in assets and not own a home. Truly we are becoming the United States of Zimbabwe.

To get a full copy of this report and a Complimentary Special Report from Wall Street Sector Selector, click here:

Have a great weekend,

John

Wall Street Sector Selector

All information presented herein is for general information only and deemed to be from reliable sources, but we cannot guarantee its accuracy. Readers are strongly advised to check with their investment counselors before making any investment. There is risk of loss in all investment activity.