Nice Legs…

The stock market seems to have delivered on our hoped for strong confirmation day. Readers will recall that the market needed to put in an impressive up-day within ten days that surpasses the NASDAQ 2121 level in order to demonstrate that the recent rally has legs. Although the NASDAQ closed one point below the important level it surpassed its target intraday. The breadth was very solid and volume decent on both the NYSE and NASDAQ. Furthermore, the NASDAQ managed to close above its 50day MA.

Traders seemed surprised that the Volatility Index (VIX) which measures fear was actually up today despite the rally. Your friendly neighborhood Kcap Team takes great comfort in knowing that the skeptics are still looming. In all likelihood they will find Bullish religion at much higher prices.

After the bell, DELL preannounced disappointing earnings and guidance. Active traders should not be too surprised that DELL has been having issues. The stock is down approximately 25% over the last couple of months. Our Bullish thesis rests more with the infrastructure build out, Semiconductors and Wireless sector as opposed to the box makers. Therefore we are not deterred from DELL's preannouncement.

The Bears will likely attempt to take the market lower on this DELL news. They're getting all lathered up hoping that the combination of DELL and an aggressive Fed might present a nice shorting opportunity midweek. While we do not deny that they may experience momentary success we strongly believe that the larger opportunity will be placed squarely in the laps of the Bulls. Any sell-off from these levels will take the market down into a coiled spring position setting up for a powerful up move. In other words, the Bears no longer have the ammunition to send the market spiraling into the abyss. Large institutional players are lurking under the surface like Jaws. Therefore we would not recommend any shorting into weakness at this point in time.

If You Held A Taser To Our Head:
Only the most nimble traders can lighten up some exposure today and tomorrow. However, we still consider that approach to be penny wise and dollar foolish.

Hope you did well today.

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