Bears hurt on this bounce

The market has staged another bounce off support. This time the bears have been hurt which is what you want to see if the market is to fullfill its destiny with an oversold bounce . Pain is what it takes to lessen their aggressiveness and embolden the bulls.

The new home sales were much better than expected which is negating the weak durable goods number this morning. Small caps are acting well and the breath is positively minty. Semiconductors however are somewhat dragging their knuckles on the floor. They may perk up later if the bears don't show up near the close. Once the semis decide to join the " pin the tail on the bear party" the oversold bounce may start to perculate some more.

We are maintaining our 65% invested position in the portfolio as long as the internals continue to perform well . We are also pleased to see most of our names acting well despite the large run they had yesterday. We have taken profits on BIDU only. Stocks like this will always confound most traders. However, the growth rate needs to be spectacular or unknowable, not just quantifiably very good as was the case with BIDU. We will look for weakness before reentering this stock . We also believe that the company was trying to be conservative, and that is why we are still interested in trading this name . For now we are content on not being involved.

The market is basing nicely and is giving us confidence that the bounce is underway . The close is key... as usual.

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