Shaken Not Stirred

Maybe it was the weak home sales with the larger supply of inventory. Maybe it was the weak durable goods report despite the strike from Boeing (BA)? Could it have been the SEC investigation of General Motors (GM)? Come to think of it…the problems with the Bush Administration could be the culprit. Whatever the reason, the market looks like CRAPOLA!!

Although the volume was lighter than yesterday, the breadth was terrible. When the market hit the 50-day MA yesterday morning traders wasted no time locking in profits. Clearly we were VERY WRONG on our contrarian intraday call thinking the market would close positive today. However, we have been expecting a retest between NASDAQ 2060 - 2070. It never ceases to amaze us the pain that one experiences even when the expected happens.

After the bell MSFT, CPWR, ELX, IM, TKLC, VSEA, WEBX, and KLAC all reported. With the exception of TKLC and IM, these reports were not what the Bulls would want to see. Does this deter us from our fundamentally Bullish view? Perhaps a little, just enough to have us slightly lighten up after the close. However, fundamentally we have never expected the technology blastoff to emanate from the likes of MSFT. The Networking and Semiconductor sectors which for the most part provided strong reports are the important catalysts'. Therefore, despite our rattled nerves, we are maintaining an overall Bullish posture in the portfolio. The Technology sector is undergoing an October shakeout which is customary before it decides to party!

If You Held a Taser to Our Head:
We will be monitoring tomorrow's action for a sense of whether or not the market is washed out and is ready to conclude the retest. So far no technical damage has occurred to deter the Bull, despite what it feels like. However, a slow drift down from these levels might lead to accelerated selling which would clearly making us rethink our bias.

What a day! Trying to hang tough!

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