Getting Down With the Downtrend!

The NASDAQ closed flat (down -1.02 points) with heavy volume of 1.7billion shares. Advancers to decliners were 12:17 on the NASDAQ and flat at 16:16 on the NYSE. The Dow Jones Industrials closed higher by +0.2% with volume on the NYSE coming in at a moderate 1.57billion shares. The underperformance of the NASDAQ versus the Dow Jones is yet again worrisome. The Semiconductors had their obligatory relief bounce but were not accompanied by the Small Cap Sector which continues to act like it has an anchor around its neck. Furthermore Energy and Gold were both higher in another slap in the face to the Bulls.

After the bell, Research in Motion (RIMM) disappointed with write downs and legal costs that were not fully factored into analyst's models. Their guidance however, seems good enough despite the stock being down after hours. Perhaps on further weakness a long-side opportunity may be developing. In Linux land, Red Hat (RHAT) posted strong results and the stock is looking up around 10% after-hours.

Apple (AAPL) was hit hard today due to a recall of its new Ipod Nano screens being defective. Our experience with AAPL as a company is that these types of obstacles present nice buying opportunities in the stock. Usually it's best to let the sellers clear out over a two to three day time period. We may start a "core" position in AAPL on any further weakness by the end of the week.

Regular readers will know that we have recently been Bullish on Ciena (CIEN). Happily, the stock was up over 10% today and is likely to continue its accent. We will consider making partial sales into further strength with the intention of trading around this core position.

Taser (TASR) and Badu.com (BIDU) are causing a lot of agony for the "Tasarians" and the "Baidurians". Both stocks are under tremendous pressure and have breached major support levels. Fundamentally these companies are sounder than the recent selling would indicate. There is no question that the valuations are still high and that more selling will take place, however at some point, these two speculative stocks will again present an excellent trading opportunity for the adrenaline friendly trader. We're watching and waiting.

If You Held A Taser To Our Head:
We used some of the intraday strength to add slightly to our short position in the NASDAQ 100 Trust (QQQQ). We are currently 20% net long. Our belief is that the stock market may succumb to selling pressure once the end of the quarter markup bid evaporates. NASDAQ 2095 is major support however it would not surprise us to see a shakeout below 2095, ultimately taking the NASDAQ to the 2077 level. We will look to aggressively rebuild around those levels.

See You Tomorrow.

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