Market Firing on only 3.5 cylinders

Small Caps continue to lag in today's market which is very disconcerting and adds validity to our relief rally hypothesis. Breadth does not impress us either. We are watching Cisco (symbol: CSCO) struggle to hold its gains and Intel (symbol: INTC) has a heavy feel to it. Overall even the NASDAQ 100 Trust (symbol: QQQQ) has not breached any important levels that would give us comfort to chase this rally.

We are however, impressed by the action in Hewlett Packard (symbol: HPQ) and Applied Materials (symbol: AMAT). It seems that the market, although up is not getting enough juice from these two names. Even the sharp drop in Crude Oil, although helping should be providing more lift to the NASDAQ.

We are still considering buying the QQQQ's on a dip on the NASDAQ around the 2140 level but are not willing to chase these higher prices. We believe the NASDAQ has upside to between 2165 and 2170, so a little pullback in here might make that a decent short term trading opportunity for the very nimble.

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