Kcap View Gaining Acceptance

Recently, the stock market reminds us of two kids playing on a see-saw. Just when one kid gets a little airborne and the other hits the ground and hurts his coccyx bone, they quickly reverse positions and return the favor.

Gold is threatening to make brand new highs and the Biotechnology sector is also catching a nice bid. Small Caps are acting lousy yet again. More importantly we are under whelmed with the Semiconductor strength today. Yesterday that group took a shellacking and today's bounce seems nothing than a reflex rally. When the Semiconductor Group catches more selling pressure the overall NASDAQ will certainly start to suffer.

However, the NASDAQ did indeed bounce off of prior support of 2109 but thus far has not shown enough oomph to attract institutional buying. Rather, the artificial bid in the market due to quarter end markups is keeping the market within a tight range between NASDAQ 2109 - 2128. We are not comforted to know that the artificial pressure is providing a floor while "real selling pressure" is creating the ceiling.

Regular readers will know that we are long-term technology Bulls. Furthermore, we have been very clear on numerous occasions that we believe the rebirth of the Technology sector will commence with the Networking and Infrastructure Groups. We are pleased to note that some other high profile money managers are starting to come around to our viewpoint. Specifically Jim Cramer from CNBC's Mad Money has just switched his Bullish view in technology to more specific sectors, primarily Networking and Infrastructure. In fact, we would anticipate he will be frothing at the mouth about this very issue on his mad money show tonight at 6pm EST.

Current stocks in this group that we are Bullish on include Ciena (CIEN), Broadcom (BRCM), Corning (GLW), Lucent (LU), Qualcomm (QCOM), Motorola (MOT), and Powerwave Technologies (PWAV).

However, we are still short-term Bearish on the stock market at this point.

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