A Dow Led Rally…OH COME ON! 3-20-06

Good Evening.

The NASDAQ held tough today and even demonstrated a little out performance versus the Dow. NASDAQ breadth was even and volume was almost 2:1 up versus down, which is better than a sharp stick in the eye. Even the Semiconductors seemed to be searching for a bottom which helped support the NASDAQ.

The Dow which has been the recent shining star did not fair as well and may have caught some pressure from a decline in the energy complex. In fact the decline in Oil related stocks can be construed as a positive as the tech sector seems to be finding some support. Rotation Baby!! Lots of hot money is sloshing around the Large Cap Industrials but GIVE US A BREAK …we all know that it will rotate back into technology as soon as Mr. Happy shows his face…no not that Mr. Happy…SICKO!

Tonight Big Ben Bernanke will be giving a speech that is sure to be dissected every which way. The mood of the market has been slowly improving which means that a Big Ben reaction seems likely for tomorrows session. The NASDAQ has found its legion of dip buyers but is thus far still missing its MOMO. Perhaps Big Ben will be able to ignite a little upside momentum which can take the NASDAQ to its 52 week high over the next few days. Should that occur, the MOMO Guys are looking at a real juicy opportunity to take the NASDAQ "where no man has gone before"…except 6 years ago.

Your friendly neighborhood Kcap Team believes that Ben Bernanke will be market friendly but not overly Dovish due to the upcoming FOMC meeting next week. However, should he discuss the lagged effect of monetary policy it may be spun by the Doves as a sign that the end of rate increases is very near.

After the Bell, Oracle (ORCL) reported basically inline earnings with Revenue that was a little light…oh, what a shock! Why ORCL is even considered a proxy for the entire Tech Sector is mystifying.

If You Held a Taser to Our Head:
We continue to believe that an opportunity exists for very attractive upside in the NASDAQ over the near term. Not being shaken out will be key! We are currently long a boatload of Semiconductors as well as many of the Financial stocks i.e. Goldman Sachs (GS), Lehman Brothers (LEH), UBS (UBS), HSBC (HBC), Commerce Bank NJ (CBH), XLF and so on and so on. As you know we also like the Networking Stocks and have built up a large position in Cisco (CSCO), F5 Networks (FFIV), JDS Uniphase (JDSU), Foundry Networks (FDRY), and a small slice of Ciena (CIEN).

Hope you traded well.

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