Psychological Damage To Bulls Might Be Too Much To "Bear" 2-1-06

We did not plan on posting today but felt compelled to throw in a quickie. We were surprised and plain out WRONG on our expectations for Google (GOOG). Despite GOOG only occupying a 1% weighting in our portfolio we are concerned with the psychological damage that has been done to the Bulls. Happily our portfolio's are nicely appreciating today due to a couple of big winners, Boeing (BA), Monster (MNST), TheStreet.com (TSCM), ArmHoldings (ARMHY), and Amgen (AMGN).

We have been Bears dressed in a Bull costume pressing our advantage recently. Due to the after hour activity last night, we now feel that taking a more defensive posture is finally prudent. The Bulls are still trying to save the day but the risk v. reward has now shifted too much for this Old Bear. In fact the premarket activity showed the NASDAQ futures lower at over 1% which was inline with what we were looking for to put the Bear hat back on. Therefore, we have used morning strength around NASDAQ 2303 to sell down quite a number of our positions. We are still net long approximately 55% but plan to scale into more short exposure into further strength.

Upside targets on the NASDAQ can be as high as 2370 and downside remains 2150. That may be Kcap oversimplifying things since it does not factor in timing, but it does give you an example of our big picture view. In other words if Abbot and Costello were Hedge Fund managers with the ability to short they may say, "Slowly we scale step by step, inch by inch…"

This time we mean it when we say, "We'll see you on Monday!"

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