Stepping Aside For Now

The stock market Bears were finally given some respect today. Despite the Semiconductors strong performance the market struggled and was weighted down primarily by the Small Cap sector. The bids were pulled as soon as it became clear that even good news was not favorably acted upon.

National Semiconductor's (NSM) intraday upside report did not ignite the proper enthusiasm one would expect prior to pending mid-quarter updates from Intel (INTC) and Texas Instruments (TXN). Remember, it's not the news that counts rather the markets reaction to the news. Clearly the Bulls seemed M.I.A. and listless even when they had plenty of ammunition to work with.

Since the market has been walking a fine edge lately, in which sudden Cliffs were imminent, we decided to lighten our exposure to a mildly Bearish position of approximately 30% invested. Our readers will recall that we were willing to play this short-term bounce due to our belief that most traders were very poorly positioned in the market. Our intermediate-term view has always been that the market was still in a larger down-trend that has more room to fall. We came close enough to achieving our short-term price target and are now content with only having one leg exposed in the market at this time.

After the bell, INTC and TXN provided us with their mid-quarter updates. INTC seems just okay while TXN is still smoking. Action in these names tomorrow will be indicative of the overall near-term direction for the market.

If You Held a Taser to Our Head: We will use any strength in the NASDAQ to further build our NASDAQ 100 (QQQQ) short position. We believe the near-term risk/reward ratio for the stock market Bulls is not favorable. We played the cute rally well and are now more concerned about protecting capital. Furthermore, we are now positioning for the much better buying opportunity we are expecting to materialize in the next few weeks.

Cash will be ohh so important for those golden opportunities in the Fall.

Hope You Traded Well. See You In The Morning.

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