Market…TAKE A NAP ALREADY! 11-17-05

Good Afternoon.

Momentum is a hard thing to kill but when it dies…it dies hard. When the NASDAQ bounced off of the 2176 level yesterday most of the anxious Bovines actually missed that dip. Kicking themselves hard in the rear-end they are now using any weakness to part with their cash. For this reason the market continues to levitate. A sympathy move with the nearly 2% gain in the Nikkei is also part of the reason for today's levitation. Let's not forget that Intel (INTC) also caught an upgrade from a minor brokerage house.

Despite the INTC upgrade the Semiconductor sector is lagging. The poor guidance from Applied Materials (AMAT) is weighting on the group. On a side note your friendly neighborhood Kcap team is no fan of the management of AMAT. We have found them over the years to be inconsistent and unreliable in their forecasts. Furthermore, they are of the cheerleading type, just before they pull the rug out from underneath investors.

The need to find balance of exposure in a market that refuses to rest but badly needs one cannot be overstated. For participants that have an intermediate to longer term Bullish view they should consider maintaining their portfolio with core positions of at least 70% net long even when they are anticipating a short-term pullback. Nothing is more painful than to not partake in a major Bull Run because you were completely shaken out from a little near-term apprehension. As long as you still have significant cash ammunition to deploy should your apprehension prove correct you will be able to withstand just about anything the market dishes out. It is the "all or nothing" trader types that suffer the most when they get COMPLETELY shaken out of their long-term plans due to short-term expected swings.

Therefore, we are still approximately 80% net long despite the stratospheric conditions of the market. However, we sure would like the market to rest in here.

Hope you're doing well

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