Days like today bolster my confidence in the iBC Machine. It clearly showed a lack of accumulation in the last few days, narrow leadership, all combined with an overbought condition. A sell-off was anticipated, allowing me to sell positions into yesterday’s strength and NOT add new positions at what would have been a short-term high.

It doesn’t matter the news–CPI, earnings, whatever, the way the Machine works is by judging the strength of moves. We were at the point where anything, let alone something as sensitive as inflation data, was going to knock us down.

Remember the game Jenga? You pull out one block at a time, trying to prevent the structural weakness that eventually causes the whole thing to crash? Yeah, this is quite similar.

That’s how I use the machine–to discern how close we are to a “Jenga!” condition in the market.

The good news — it is now safer to buy stocks. I am looking to begin building positions in some momentum names.

Check back tonight for the nightly iBC Update.