Hard To Keep The Bull Down

The market is very impressive in its ability to hold the gains that have been racked up recently. Clearly there are many traders lurking who are compelled to buy even the shallowest of dips. Despite today's profit taking in the Semi's (which was contained) the NASDAQ managed to close over the key 2200 level. Breadth was positive however volume was light. Even Dell (DELL) managed to hold gains into the close despite it's somewhat disappointing earnings report. The pressure in Oil has certainly provided a little ammo to the stock market Bulls as well. All-in-all the Bulls racked up another short-term victory.

The NASDAQ is now within spitting distance of this years intraday high of 2219. A little Monday optimism might actually present the opportunity to recapture that level. The concern of course is that when a market hits key resistance coming from such an extended overbought condition it is very vulnerable to a sharp pullback. In light of the extremely Bullish underlying fundamentals to this rally (in our view) we would not be surprised if the market were to breach the 2219 level early next week, further sucking in more shell shocked underinvested Bulls and Bears. As Ross Perot used to say, "Expect to hear a giant sucking sound".

If You Held A Taser To Our Head:
Should the NASDAQ recapture the 2219 high early next week we would expect a false breakout to occur. Our strategy at that point would be to lighten exposure down to 75% net long in anticipation of a healthy pullback. As we discussed in our prior posts it is incumbent upon the NASDAQ to do a better shake-out and dance this time around or risk serious damage for the intermediate and long-term.

Hope you did well today.

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