Successful Retest?!?! 12-8-05

Good Evening.

Sorry for the lack of posts today as half of our team has been trading and the other half has been meeting with new clients. We truly enjoy writing the Kcap Trading Blog but frankly our highest allegiance resides with our clientele. Many readers on this site have inquired about our performance, but while we are not at liberty to discuss specifics on the internet, suffice it to say that they are of the double digit kind. Readers who are interested in having a managed account with the Kcap Team are encouraged to contact us. We always enjoy bringing new members into the Kcap Family.

The market provided some downside fireworks as we had hoped for and wrote about on last night's post. Initially the morning optimism from Texas Instruments (TXN), Xilinx (XLNX), and General Motors (GM) helped the market rally only to be faded hard around midday as we predicted. In fact, the newly trapped Bulls were forced to stop out, sending the NASDAQ down to the low end of the recent trading range (NASDAQ 2233). The dip buyers did a good job of bouncing the NASDAQ off of that important level producing a respectable close. In fact all three major averages bounced off of major support today. Furthermore breadth was positive on both the NYSE and NASDAQ and the volume was slightly heavy.

Good news from Qualcomm (QCOM) was ignored and TXN also took a minor hit. The market seemed to use higher energy prices and the news from Toll Brothers (TOL) that the housing sector is cooling as an excuse to sell. In reality, this was simply a market that was BADLY in need of a fearful pullback. Finally a dose of fear has been delivered without breaking the back of the uptrend.

After the bell, Intel (INTC) provided a mid quarter update which reaffirmed their previous guidance. Although they lowered CapEx spending slightly we don't believe any fundamental news has been given to derail the Tech Rally other than a possible knee-jerk reaction.

If You Held a Taser to Our Head:
As we discussed in last night's post we used our solid cash position to redeploy into aggressive names once Mr. Fear showed up. We have even begun rotating out of some ETF's and into more high beta, solid performing, low priced technology stocks. With the Fed around the corner and a successful market retest in our pocket our confidence has reemerged that the underinvested Bulls will resume their upward December chase soon.

We may not be able to post until Monday morning. We'll try to sneak one in tomorrow if possible.

Hope you traded well.

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