The Sweet Spot? 4-19-06

Good Evening.

Well, well, well…patience is a virtue. Your friendly neighborhood Kcap Team has been quietly building up our long side exposure over the past couple of weeks and fortunately so. A couple of times we were almost given the "shake 'n bake" but decided to dig down deep inside to stay the course. If it weren't for that darned feeling of a decline to NASDAQ 2150ish (sometime, who knows when?) we would have gone through a lot less angst over the past few weeks. However, once we realized that the consensus had come around to our view that a nasty pullback was imminent, we decided to look the other way, hold our nose, and take the plunge...(when so many traders are afraid to put on the radio for fear of Armageddon, then you have a consensus). We loaded up on Semiconductor stocks and Networking stocks (specifically the optical plays) and found ourselves very well positioned for the recent ramp. In fact we had our single best day since starting Kcap and found our portfolio's far outperforming the NASDAQ…not too shabby…if we say so ourselves!

The market is potentially entering a SWEET SPOT which includes a Fed that will soon be put to bed, 'earnins' that are 'burnin', the Bulls in Oil getting sp"oil"ed, long term rates starting to abate, Iran playing their last hand, and any other nonsensical rhyme you can think of that describes why stocks are likely to move higher. In other words, the glass is half full and you need to be a BULL!

The dip buyers are now back in full force and need to be given a lot of respect. Do not underestimate their stupidity, for they will coin 'serious money' while the Bears roll their eyes at the Bulls supposed misplaced enthusiasm. The potential for the NASDAQ to pop 100 points or more from here before the summer is very real. Notice that we said potential as we are mindful of the fact that a very unpleasant decline is still out there somewhere over the rainbow. However, until the market action closes below meaningful support levels, the Bulls have the baton and that is where our chips are lying for the moment…pun intended.

Earnings season has been quite healthy thus far in Tech land. Taking in concert with current valuations and price levels, the following stocks that recently reported seem particularly attractive: TXN, YHOO, INTC, QCOM, AAPL, and JNPR. We have recently been drawn to JNPR due to the fact that it is in our favorite space and also represents a potential take out candidate.

Some names have shown slight disappointment such as EBAY (what a shocker) and MOT. However, in a healthy market all misdeeds will be forgiven for those stocks that slightly disappointed. In other words, don't be too quick to jettison stocks that disappoint and gap down, give them a little chance to come back before making your exit.

If You Held a Taser to Our Head:
Ohh, and one more thing…don't get greedy and expect the market to go up in a straight line. The best thing this market can do right now is to consolidate for a few days around these levels (NASDAQ 2350 - 2375).

See you tomorrow.

___________________________________________________
The analysis, opinions and/or forecasts expressed on the Kcap Trading Blog (“KTB”) are for informational purposes only and should not be relied upon in making investment decisions. By using this site you agree that Kleiner Capital Management, LLC (“KCAP”) and its principals are not liable for any action you take or any decision you make in reliance on any content. Please be aware that there is no commitment by KCAP to update the KTB. Furthermore, there may be inconsistent timing and follow up (if any) of posts.
None of the information on KTB is considered individualized investment advice and should not be construed as a recommendation or solicitation to purchase any securities. Reliance on information provided on KTB in no way establishes an advisor-client relationship. Investors are encouraged to seek the advice of a qualified investment professional prior to investing funds.
Clients of KCAP, as well as the firm’s principals and other employees, may be invested in securities discussed at KTB. However, any mention of said securities is not intended to influence market conditions for the security to the benefit of KCAP clients and/or principals and employees. KCAP is not affiliated with any advertisers on this site and does not endorse any of their content. For additional information and disclosures, please visit www.kleinercapital.com.
The information on KTB has been furnished from sources we consider to be reliable, but no guarantee is made with respect to accuracy.
___________________________

Click Here To E-mail Comments