Yeah we see a bid, but it's temporary

The stock market seems to be shrugging off the lousy news from our friends in the energy sector. Crude inventories showed a build of 300k barrels, smaller than expected. Distillate inventories were mostly inline at a 1.2million barrel build. Gasoline inventories posted a much larger than expected drawdown of 5million barrel's while expectations were for a drawdown of around 1.3million barrel's. This certainly validated some of the supply concerns in energy and will most likely keep a bid under the price of Crude Oil. Near term support for Crude is between $63 and $65 per barrel. When Crude bounces from there the NASDAQ may feel some more pressure.

The Semiconductors are leading today yet the Small Caps are slightly lagging. Beaten up quality names such as Cisco (symbol: CSCO) are showing an overdue relief rally. Key tells such as Hewlett Packard (symbol: HPQ) and Applied Materials (symbol: AMAT) are acting well.

The NASDAQ is definitely signaling that it intends on shrugging off bad news and wants to go a little higher. Remember, we need to be concerned with not only how much higher, but for how long the move may last. The poor relative performance of Small Caps (combined with the outperformance of Semiconductors and recently beaten up Blue Chips) has all the makings of an oversold bounce and nothing more. Some people may refer to this as a relief rally.

We have not made any purchases of Nasdaq 100 Trust (symbol: QQQQ) yet but are considering scaling in between 2135 and 2140. The temporary underlying bid in the NASDAQ has forced us to move our intended entry points up approximately 10 points. We also expect more volatility in the afternoon with the Bulls most likely prevailing for a day or two.

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