Market Not Done Frustrating the Bears

Good Morning.

Overseas markets were generally higher across the board. U.S. futures were flat to down. Productivity came out this morning worse than expected, Unit Labor costs were higher. This is the type of news that will make the Bulls "pause".

Yesterdays rally was impressive and continued to amaze most traders; the market just seems to love bad news lately. Despite the big upside move in the stock market the put/call ratio remained high around 94%. This is indicative of the large skepticism that exists.

As we discussed in yesterdays closing post, even the seasoned professionals are not accepting the notion that this rally has any legs. They point to fundamental issues of the economic effects from Katrina and other underlying concerns that were exasperated by the storm i.e. Oil anyone? Technicians are also noticing the underperformance of the NASDAQ to the DOW which is never healthy for the continuation of an uptrend.

For these reasons and more, we are willing to be slightly out there and remain 50% invested in anticipation of a little more upside and frustration to the Bears. Our NASDAQ target remains around 2190 yet we will not hesitate to hit the ejector button after the first large Cliff that materializes in the market.

Good Trading.

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