Does Anybody Have Peroxide?

Alright…alright…that's the last time we'll call you Bears, Gentle Ben (as we dab the Neosporin against the claw marks across our backs). Clearly the Bears were more serious than we gave them credit for. What started out as purely profit-taking morphed into genuine fear. Despite the fact that we feel the Bearish action can be explained away from sell programs taking place in the Energy sector we are cognizant of the fact that the Bears placed the Bulls in a slightly vulnerable position.

It is now incumbent upon the Bulls to hold key support levels over the next few days. No serious technical damage has been done yet, but the NASDAQ will need to hold 2035ish to keep the timing of our Bullish thesis intact. Granted that would be a large decline for many Bulls to stomach from NASDAQ 2068. However the hallmark of the new Bull market will clearly contain more volatility. Traders will have to learn to adapt to larger swings in the market than we have experienced in recent years. Do not look at volatility as a negative phenomenon. In fact for traders who know how to press their advantage, it can be their best friend.

After the Bell: Google (GOOG) was simply sensational and is looking up 10%. In addition to GOOG, Broadcom (BRCM), Sandisk (SNDK), and Xilinx (XLNX) had good reports with BRCM raising guidance.

The Semiconductor sector performed well today compared to the rest of the market. As long as it can maintain relative strength the Bulls will have strong ammunition on their side. We are however slightly concerned that the Small cap sector was sold off rather harshly. We recognize rotation into Semi's played a part to some degree but we are concerned nonetheless.

If You Held a Taser to Our Head:
This is not a market for the faint of heart. Transitions from a Bear to Bull market are notorious for extreme volatility. Traders would do themselves a favor by trading a little less and investing a little more. Use the volatility to your advantage for small trades but primarily to build core positions.

See You Tomorrow

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