Bears May Be Long New Underwear. 3-14-06

Good Evening.

Just when you thought the market would never go in either direction with conviction, it lurched to the upside leaving Bears and underinvested Bulls in its wake. All of the major averages showed impressive strength, closing near the highs of the day. Interestingly the level of Bearishness is still plentiful despite the apparent breakout to the upside. This bodes extremely well for further continuation which might offer the opportunity for the market to challenge its 52 week high rather soon. Should the market hold on to today's gains and show a little more upside action during the remainder of this week, the momentum players will start to give chase. Furthermore, performance anxiety is likely to kick in once the market threatens to break the 52 week high. As was famously said in the movie 2001 A Space Odyssey, "something wonderful is about to happen".

The possibility still exists that the Bears will continue fading every upside move ruining the chances for a breakout. While this remains to be seen we are cognizant of the fact that the Bears need to show their stuff soon or risk being converted into Bulls rather abruptly. Too many moons are now aligned for the Bullish camp that makes this moment very dangerous to be a Bear. We are not pounding the table on our conviction of more upside, rather bringing to your attention the ferocity of the upside move SHOULD it kick in.

If You Held a Taser to Our Head:
Your friendly neighborhood Kcap Team is currently aggressively net long. We have significant exposure in Technology Stocks and have even added to the Semiconductors today. We have lightened up on some of our Gold holdings but are still maintaining a healthy core position. The next few weeks are very important as they have the potential to offer much of this year's performance for many portfolio managers. Again the window of opportunity has opened for the Bulls and they need to Carpe Diem.

Hope you traded well.

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