Our Black Friday Sales Served Us Well! 11-28-05

Good Afternoon.

On Wednesday and Friday of last week we chose to lighten up some of our exposure into strength. Evidently that was the right decision. The market is undergoing a small pullback as profit takers jumped on pre-market strength. The breadth is negative at approximately 2:1 on both the NASDAQ and NYSE and Small Cap action is BLAH. Even the declines in Oil & Gas are not lending any support to the market. It appears that stock market traders are recognizing that the mild winter thus far is not sustainable and expectations of Oil soon reversing higher are creeping into their heads.

The sentiment indicators recently are alarming; for the moment there are simply not enough Bears and too many Bulls for our comfort. Upside volume as a percentage of total volume is also continuing to be a cause for concern.

The market will be considered VERY overbought by the middle of this week. Coincidentally (or not so) November's month end also coincides with the middle of the week. Therefore, today's pullback will likely draw in buyers as fund managers will once again play the window dressing game. However, the combination of month end and an extremely overbought market should produce more aggressive selling in the latter part of the week.

Your friendly neighborhood Kcap Team will be looking for short-term trading opportunities today and tomorrow to deploy the cash that we raised on Friday. We expect to be scaling into our favorite names around NASDAQ 2230 - 2235. Our intention is to flip out of that acquired exposure into window dressing strength and wait for the more aggressive pullback before we truly reload the boat.

Hope you're doing well.

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