Bulls Follow the Pilgrims in Exploring a New Range 11-21-05

Good Afternoon.

The NASDAQ continues to hold tough despite the selling in some of the Semiconductor names. The NASDAQ, S&P 500, and many Asian markets are breaking above multiyear highs. Today however the pressure in Semi's is stemming primarily from Sandisk (SNDK) down approximately 16% due to the announced alliance between Intel (INTC) and Micron Technologies (MU). Small Caps are showing a little lagging action as well which is preventing the Bulls from really getting things going.

Have you noticed that despite the minor obstacles in front of the Bulls today, the Bears are even more lame? The burden of proof continues to rest with the Bears. They need to follow up on Cliff's in the market that they are still able to produce. Every time the Bulls recognize that the Bears "Get Spent" rather quickly the Bulls start administering their punishment.

The put/call ratio has been falling recently which is an indication that more people are becoming believers in an end of the year rally. However, some people get nervous that too many players are anticipating a fourth quarter rally. They believe that when the consensus is expecting something it rarely materializes. Other people believe that the consensus is usually right until it becomes extreme in its conviction. This game of out guessing the guessers becomes futile. Simply put your friendly neighborhood Kcap Team has articulated on these pages many reasons to expect a fourth quarter rally and beyond. Unless we see evidence that changes our underlying reasons we will continue to be believers ourselves.

Should the Bulls exert more pressure on the Bears this week, a new trading range will have been created. Rather than NASDAQ 2200 be the top end of the range it will now become support. The beautiful thing is that isolating resistance is much more difficult due to the fact that we are in waters uncharted since 2001.

Hope you're doing well.

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