How quickly things change. Only a few weeks ago it appeared as if the market was going to put in a bottom, as the financials traded up through one awful headline after another.

Eventually, the market came to its senses and sold the rally in financials, and that is where we remain today -- trapped in the same 50-point range within the S&P 500 (SPX) of between roughly 1,250 and 1,300 for the past two months.

My sense is that the major averages may not remain range-bound and may begin to turn to the downside.

In keeping with my discipline of "forced displacement," we'll cut bait on two holdings to make room for new recommendations that are coming along -- one in the September newsletter next week and the other soon after.

Shares of CPFL Energia, S.A. (CPL) broke support at $60, which I said was a sore spot for me, technically speaking, and now poses a threat to trade considerably lower. Sell the stock here while we can get out near our cost.

I'm also cutting the Nicholas-Applegate Convertible & Income Fund (NCV) at market. This closed-end fund has had ample opportunity to impress us in a down-rate market and has failed to perform as a good convertible fund should. When interest rates eventually start to rise, convertible securities, like every other bond equivalent, will get hit.

I recommend selling shares of NCV at market to raise capital for new picks.

Bryan Perry

Editor The 25% Cash Machine