Sticking Our Necks Out

The stock market seems to want to go higher despite the red on the screens. There is a clear tug of war taking place under the surface between with Semiconductors, Oils on one end of the rope and everyone else on the other. The question is, "Who will prevail?" Will the Semiconductors continue their slide, creating more of a give-up in the names like Dell (DELL) and Yahoo (YHOO) or will a recovery in the Semiconductor Index (SOX) create even broader buying in the market.

We are heartened by the fact that there seems to be rotation from one technology industry into another as opposed to an overall "Tech-wreck". This indicates to us that should the key Semiconductor Group manage even the slightest relief rally, the market would likely lurch forward much more significantly than most traders expect. Should that event take place, the NASDAQ would likely breach our near-term target of 2120 perhaps recapturing 2140. Mind you, this is all in the context of the bottoming formation. Therefore, further retests of last weeks lows would still be likely.

Considering that the Semiconductor stocks have corrected approximately -10% in the past week, it is not out of the question that the above described relief bounce in that group would materialize; therefore, helping our broader short-term market call come to fruition. Traders need to be patient for at least one or two more days in order to determine if this market call has merit. Our stops are loose in anticipation of this projected market action as we are becoming more Bullish for a nice end of the week rally.

Monday weakness may lead to late week sweetness.

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