Mini Battle Shaping Up

The NASDAQ is solidly in positive territory through most of the day, outperforming it's larger brother the DOW. Interest rates continue to climb and are gaining more and more attention in the minds of Traders. Notably the Semi's continue to lag and are providing a level of uneasiness for many.

Key tells from earlier posts are PG which has another classic "sell the news" reaction but may also be indicative of the slow rotation away from DOW stocks and into NASDAQ. IM is having another strong day yet we are making partial sales into the strength. WFMI is lagging but stable and we are holding our position for now.

The economic news flow continues to be positive with a strong ISM number containing a tepid Prices Paid component. The recent string of positive economic news has been the culprit for rising interest rates. We feel like Martha, in saying that "It's A Good Thing". Rising rates to us imply growth not necessarily inflation concerns.

Some of the large horsemen such as MSFT and CSCO are putting in strong performances. If they can continue holding near the high end of their trading range, we believe that bearish traders will again capitulate and cover. Battling the market when these NASDAQ heavyweights are acting this well is usually a losing intraday trade. Therefore, with breadth remaining positive and as we approach the early afternoon we have decided to tip our hat to the Bulls for an intraday trade.

Should the market catch a late afternoon bid we believe the Semi's represent a good catch-up long side trade. Their recent weakness over the past few days may be setting up some type of relief rally should the QQQQ's decide to take off. We will be scaling into SMH, however we are keeping a reasonably tight stop.

Oil continues to threaten the $62 price target that we spoke about last week. Resistance should kick in on this particular attempt to break through. This would provide more fuel to the NASDAQ BULLS.

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