Using Our Cash to Buy. 7-12-06

Good Afternoon.

When the market started to ramp yesterday off of the KLAC comments our first inclination was to distrust it. After all KLAC is not exactly a bellwether and has often been inconsistent with their outlook. However, after careful consideration we decided to focus more on the extreme positive reaction that occurred in the Semi's from even the most minor of positive news. What this tells us is that most of the negative news regarding earnings and guidance for technology companies has been baked into the cake. Traders have been brutalized recently specifically in the Tech and Semi arena. Should there be further reports that come close to the comments made by KLAC we may see another upside attempt.

Our upside target for the NASDAQ over the next several weeks still remains between 2230 - 2270. Due primarily to the above reasons we have decided to use our large cash hoard to add Semi exposure as well as a bunch of other momentum names. They are as follows: SMH, ADI, AKAM, BBY, BIDU, BRCM, EBAY, GOOG, HANS, NTRI, TXN, LVS, CMI, CLB, YHOO, and QQQQ. We also have a healthy dose of the stocks that will do well in an economic slowdown and we choose to maintain them at this juncture. We have also added to our Large Cap money center banks specifically C and BAC. Currently the NASDAQ is at 2098 and we are now 85% net long.

We'll see you tomorrow.

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