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Afternoon Snack



If I had to choose one theme today, it would have to be short covering. A quick scan of a few large cap names show us that the shorts are still alive and plentiful. General Motors (GM: NYSE) is up over 6% today. Why? Is it because their 0% financing is making them money? Is it because their profit margins are expanding? I don't think so! Take a look at Merck (MRK: NYSE). Here is a company with zero in its pipeline and it is up almost 3%! I guess they did report a rise in profit so it is justified. What was the rise attributed to? Better drugs? No, it was because of cost cutting. Cost cutting? I thought we got past that earlier this year but I guess Merck forgot to do that when every other company did.

My point is that often times people get sucked into things, whether it is in the market, in their personal lives, or business in general by just taking things for what they are. If you tune into the teletubbies they will talk about how great the action is in these stocks! Come on! And the sad part is that people will believe them. If we got the chance to ask them the simple question of "why?" I wonder what their response would be. In fact I often do this with people I know. They make a statement and I press them on why they think that. More times than not I find that people don't know what they are talking about and they just regurgitate information.

I bet a few of you are wondering if I am having a bad day. All this negativity! No I am not having a bad day but I am astonished about how people take things on the surface for what they are and do not have the ability to formulate their own opinions. So with the market making new 52-week highs, and with everything appearing to be fine, I just wanted you Minyans to look around, ask a few questions and figure out why the market is up today.

A quick snapshot of the market shows that software is making the biggest percentage gains on the day. The semis, broker/dealers, and Internets are also performing well. The NDX is setting up for yet another test of the 1450 level. The S&P is holding strong and the Dow is acting well. The real test will come at 2:00 because the last two days have been met with selling at that time. Remember, the trend is your friend!

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No positions in stocks mentioned.

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