Still Playing Defense 8-23-06
After the recent rally in stocks the pressure to maintain the recent gains is severe.
Therefore, we should not be surprised to see the downward pressure that has materialized in the past couple of days. Expect this pressure to continue a little while longer perhaps abating by mid next week. So long as the NASDAQ can hold well above the July lows the technical conditions will be in place for another leg up. We still expect the NASDAQ to find, at least temporary, support at the 2100ish level.
The dip buyers are lurking but do not have the confidence just yet to step in due to the severe beating they have taken over the past few months. On the other hand, the recent pounding that the bears have taken in the past week and a half has also made them rather timid. Mix it all together with the summer doldrums combined with third string traders manning the turrets and you have a slow drip downward until the near-term over bought condition can be relieved.
The market also found stealth support from the continuous bid in National Semiconductor. The NSM report was nothing to write home about except for the positive spin on margins. Many bears on the stock were frustrated today as NSM refused to cooperate on the downside. This in turn helped support the overall Semiconductor complex which spilled over to the general market as well. We’re not suggesting that today was a good day for the bulls but rather that it could have been much worse. The one thing that many experienced traders should have learned over the years is to not rest their hopes on a market that is being supported by a company as notoriously pathetic as National Semiconductor. The downside pressure in that name is most likely only delayed. Therefore, we were all too happy to start building short exposure in NSM throughout the day.
If You Held a Taser to Our Head
The NASDAQ had a bout of last hour short covering which made the losses less news worthy. In fact, it would not surprise us for a little intra-day follow through tomorrow to the upside. The close will be key and we are expecting the bears to get more aggressive in the afternoon especially if they are served morning strength on a silver platter.
Hope you did well. ___________________________________________________
The analysis, opinions and/or forecasts expressed on the Kcap Trading Blog (âKTBâ) are for informational purposes only and should not be relied upon in making investment decisions. By using this site you agree that Kleiner Capital Management, LLC (âKCAPâ) and its principals are not liable for any action you take or any decision you make in reliance on any content. Please be aware that there is no commitment by KCAP to update the KTB. Furthermore, there may be inconsistent timing and follow up (if any) of posts.
None of the information on KTB is considered individualized investment advice and should not be construed as a recommendation or solicitation to purchase any securities. Reliance on information provided on KTB in no way establishes an advisor-client relationship. Investors are encouraged to seek the advice of a qualified investment professional prior to investing funds.
Clients of KCAP, as well as the firmâs principals and other employees, may be invested in securities discussed at KTB. However, any mention of said securities is not intended to influence market conditions for the security to the benefit of KCAP clients and/or principals and employees. KCAP is not affiliated with any advertisers on this site and does not endorse any of their content. For additional information and disclosures, please visit www.kleinercapital.com.
The information on KTB has been furnished from sources we consider to be reliable, but no guarantee is made with respect to accuracy.
___________________________
Therefore, we should not be surprised to see the downward pressure that has materialized in the past couple of days. Expect this pressure to continue a little while longer perhaps abating by mid next week. So long as the NASDAQ can hold well above the July lows the technical conditions will be in place for another leg up. We still expect the NASDAQ to find, at least temporary, support at the 2100ish level.
The dip buyers are lurking but do not have the confidence just yet to step in due to the severe beating they have taken over the past few months. On the other hand, the recent pounding that the bears have taken in the past week and a half has also made them rather timid. Mix it all together with the summer doldrums combined with third string traders manning the turrets and you have a slow drip downward until the near-term over bought condition can be relieved.
The market also found stealth support from the continuous bid in National Semiconductor. The NSM report was nothing to write home about except for the positive spin on margins. Many bears on the stock were frustrated today as NSM refused to cooperate on the downside. This in turn helped support the overall Semiconductor complex which spilled over to the general market as well. We’re not suggesting that today was a good day for the bulls but rather that it could have been much worse. The one thing that many experienced traders should have learned over the years is to not rest their hopes on a market that is being supported by a company as notoriously pathetic as National Semiconductor. The downside pressure in that name is most likely only delayed. Therefore, we were all too happy to start building short exposure in NSM throughout the day.
If You Held a Taser to Our Head
The NASDAQ had a bout of last hour short covering which made the losses less news worthy. In fact, it would not surprise us for a little intra-day follow through tomorrow to the upside. The close will be key and we are expecting the bears to get more aggressive in the afternoon especially if they are served morning strength on a silver platter.
Hope you did well. ___________________________________________________
The analysis, opinions and/or forecasts expressed on the Kcap Trading Blog (âKTBâ) are for informational purposes only and should not be relied upon in making investment decisions. By using this site you agree that Kleiner Capital Management, LLC (âKCAPâ) and its principals are not liable for any action you take or any decision you make in reliance on any content. Please be aware that there is no commitment by KCAP to update the KTB. Furthermore, there may be inconsistent timing and follow up (if any) of posts.
None of the information on KTB is considered individualized investment advice and should not be construed as a recommendation or solicitation to purchase any securities. Reliance on information provided on KTB in no way establishes an advisor-client relationship. Investors are encouraged to seek the advice of a qualified investment professional prior to investing funds.
Clients of KCAP, as well as the firmâs principals and other employees, may be invested in securities discussed at KTB. However, any mention of said securities is not intended to influence market conditions for the security to the benefit of KCAP clients and/or principals and employees. KCAP is not affiliated with any advertisers on this site and does not endorse any of their content. For additional information and disclosures, please visit www.kleinercapital.com.
The information on KTB has been furnished from sources we consider to be reliable, but no guarantee is made with respect to accuracy.
___________________________
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posted by Kleiner Capital Management, LLC. | 6:38 PM
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