It's Been a Long Week…"Today"

The stock market had another very impressive day. Volume was heavy but not as high as yesterday. The Semiconductors stole the show closing up +1.9%.

Whenever traders are feeling speculative and are hungry for beta, Semiconductors is their sector of choice. The problem is that these same traders are "hot money" and will just as quickly sell out their positions in a heartbeat. These gun slinging traders will go from extremely long to extremely short in a matter of seconds. For this reason, Semiconductor rally's offer the most excitement with the most risk. Don't get us wrong, it is critical that the Semi's at least participate for any NASDAQ rally to have sustainability. However, when Semi's are the clear leader during a time of artificial anxiety and gamesmanship, the risk of a sudden nasty reversal climbs exponentially.

Certainly we are unhappy that we did not participate to a greater extent in the last day and a half. When the market explodes to the upside carrying this high level of risk, you will usually find your Kcap Team choosing to play a little, but keeping much cash on the sidelines. We need further evidence from other sectors to build confidence that the Semi blast off will not spiral out of control and crash land.

Window dressing is finally over, yet we feel that many Bears are looking stunned like dear in the headlights. Therefore, some more Bull trapping is possible on Monday. Traders that feel the need to capture the full benefit of each and every rally will also capture the full pain of each and every decline, fully invested. Often a short-term miss of opportunity transforms into great position for better long-term success. Keep in mind however, should other internals join the Semiconductor party, we will suck it up and B.O.O.B (bring our own beer) as well.

If You Held a Taser to Our Head:
We are taking home our portfolio's approximately 25% net long. Many immature Bears will kick themselves repeatedly over the weekend and may provide some more upward pressure early next week. The true grizzlies are still waiting for their opportunity and are drooling all over themselves.

Have A Good Weekend. See You Monday.

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