Gentle Ben

The Bears may have pulled the market back a little too early today. Although, they have done a good job in reminding the Bulls that the coast is not yet clear. However, we take note of the Bullish action in stocks that have had positive earnings reports, specifically Juniper (JNPR), Analog Devices (ADI), and VeriSign (VRSN). As long as they continue to hold up as well as they are, Bears will be reminded that the Bulls don't scare too easily anymore. The most likely cause for today's broad inaction by the Bulls stems from the energy complex. Oil related stocks continue to be hammered in an unrelenting fashion. Clearly this is providing tremendous drag on the S&P 500.

We expect the Energy related shares to catch some buying interest late today and into tomorrow. The combination of expected strength in Energy Select Spiders (XLE) and continued out-performance of the Semiconductors bodes well for a continuation of the rally. Although it seems counterintuitive that Technology and Oil would rally simultaneously, we would not be at all surprised for it to occur at this juncture.

The Bears will likely suffer more damage on the next rally which will make them resemble Gentle Ben as opposed to a big bad Grizzly. We expect this to occur over the next few days.

Stay the course.

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