Anybody Out There? 9-26-06

By hook or by crook, the Dow seems to want to challenge its all-time high. Nevermind that it is attempting such a feat all by its lonesome, that 11,748 level is a magnet. Today's action in the Semiconductors as well as the Russell continues to show signs of deterioration and underperformance. All of the technical indicators that we have been harping about are starting to scream "DANGER, DANGER Will Robinson!" Even the VIX is showing alarmingly high levels of complacency which may be the final straw on the Camel's back. We are looking forward to tomorrow's sentiment indicators of increased Bullishness from the news writers as another contrarian indicator.

How much longer can this "soft landing utopia" last? Can it be sustained in the face of a well deserved "snap back" in the energy and commodity complex as may have started to percolate today in XLE and Gold stocks? Can we expect to see much lower yields in the 10 Year Note (doubtful), and if we do, will that bring back the speculative money into housing away from stocks? In fact, the much beaten up housing sector is also showing signs of life.

If You Held a Taser To Our Head:
Your friendly neighborhood Kcap Team is staying the course of covering our shorts on dips and remounting on strength. Admittedly we could use a little less strength these days. Oh well, patience is a virtue and the #1 attribute that money managers have over amateurs. Do not fall victim to the commentators who get emotionally Bullish at these moments in time. They are likely the same individuals who got you out in July!

Some recent positions that Kcap is scaling into: Short PMCS, JDSU, CAL, TLT, SMH, SNDK, CVC, BRCM, NSM, EBAY, SBUX, and RIMM. Long GOLD, ABX, PAAS, MRK, PG, CL, CLX, K, PEP, SWY, BRL, UTX, GIS, GD, and UNH. Still holding mucho cash!

Readers of the Kcap Blog who followed our Bullish advice two months ago (when the market was going to "hell in a hand basket") need to remember that we helped you capture the big move up and we are just as likely to save your tush from the next big move down.

Are you still there? Hello?

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