Trader's Crystal Balls

Well, Hurricane Rita hit and turned out to be nothing more then "Dust in the Wind". Oh wait a minute…that hasn't happened yet. However, watching traders buoy the stock market over the last two days, you would think that each and every one of them has a crystal ball.

The good news is that the rally was relatively contained. A stronger close this afternoon would have definitely created the inclination to "sell the news" should Rita be less devastating than expected. The bad news is that Rita must now be less devastating than expected. Regardless, traders did what they do best and saved the market yet again, before it was able to put in a solid capitulatory rinse (don't read that as a good thing!).

Despite the above, we are still expecting a very large short squeeze followed by the commencement of more serious buying by the middle of next week. Our regular readers know us to be very Bullish on the technology sector. They also are aware that we have been patiently waiting for levels below NASDAQ 2100 to deploy our large cash hoard into key names.

We are excited that our patience has been well rewarded as we finally put much of our cash to good use. Our intentions are to continue adding more exposure into dips over the next couple of weeks. Note: we are not opposed to hedging our positions should the stock market get too happy in the very near-term. We will also be watching the internals for signs of relative weakness and would not hesitate to get more defensive in a New York Minute should this materialize. However, unlike the past couple of months, we are now approaching the market with a very Bullish bias.

If You Held a Taser to Our Head:
We will continue beefing up our Semiconductor and Networking exposure throughout next week. Today's portfolio additions include Juniper (JNPR), Ciena (CIEN), and Dell (DELL). We strongly believe that these companies and other infrastructure tech sector components should be the primary beneficiaries of the massive rotation into technology that we have been forecasting.

Check back with us on Monday for other specific recommendations as we deploy more of our cash.

Hope You Traded Well. Enjoy the Weekend.

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