NASDAQ

For the past two weeks I've been commenting on the bearish divergence between the NASDAQ and the S&P500. The spy's made new highs but the Q's did not as you can see in the above chart. Today at one point we saw some weakness in the NASDAQ especially in the semis, but by the close there was short covering and the market rallied.

As of this writing CSCO is up a dollar in after hours trading. Tomorrow if I see the NASDAQ showing weakness like it did today, I will add to my QQQQ short position. I'm going to watch CSCO carefully because that's the stock that will most likely have an influence on the NASDAQ tomorrow. There was some strength today in RIMM, YHOO, and EBAY, but if I see the semis showing weakness again and CSCO begins to fall, I'll look to short more Q's. On the other hand, if the Q's get above 44.50, I'll probably not short anything and I might even get out of my small short position that I've been holding since December. I'm just trying to keep this simple and let you know what I am doing before the fact. We'll see how things unfold tomorrow.