Premarket 8-15-05

Good Morning.

Overseas markets were relatively flat. US Futures have been slightly down most of the morning. NY State Empire index came out roughly inline. LOW will be a stock to watch today as it reported better than expected earnings. AAPL made the all time favorite stock list at a brokerage firm which is always a scary thought when the stock has already tripled. Silver Lake Partners and KKR will be acquiring Agilent technologies (A) semiconductor business. History shows that Silver Lake is usually pretty good at spotting longterm trends. This comforts us with our longterm bullish thesis.

The downtrend in the market is still intact. However, it is not unreasonable to expect an oversold bounce at this point in time. Oversold bounces are only tradeable for the very nimble. Tight stops will be necessary if one were to play it. For many it would be preferable to wait for at least a "tradeable rally". The difference between a tradeable rally and an oversold bounce is primarily the positive divergences that appear in the former. A tradeable rally can last several days while an oversold bounce may only last a day or two. Of course, the ultimate prize will be the long-term rally that we are expecting. The make-up of a longterm rally is something we will discuss in later posts.

Your friendly neighborhood Kcap Team may consider going in to play this oversold bounce with the aforementioned tight stops. We will be watching the NAZZ to see if it holds the lows of last week. The Small Caps will also have to be exhibiting relative strength.

-Good Trading-

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