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The Sun came out real fast yesterday morning and obliterated October's early shadow, as if it were of a passing cloud and the correction which started Friday into Tuesday turned out to be the fleeting moment we alluded to yesterday, wherein we declared that we would not rule out the market's propensity to suddenly turn on a dime... In actual fact the power of the impulse wave resumed with a fury as markets rebounded strongly into the early afternoon, setting new all time records in the Dow Jones Industrial Average and at the same time drove the S&P 100 or OEX to new multi-year highs, but the S&P was not able to do the same and in fact, readers should be aware that we have the makings of a classic bull trap here, should these other indices fail to confirm the DJIA's new record highs in short order. The most glaring divergence is that of the S&P cash, versus the December Futures contract... We have seen this type of multi-market divergence before and unless it is negated by some aggressive follow-through to the upside, we would urge extreme caution, as we are kind of priced for perfection right now and experience has shown that this is a time to be careful of some kind of exogenous event, spoiling a great party...

To be honest, the S&P setup looks a little scary and its evolving makeup is something we've been commenting on periodically, and again yesterday: Our sixth sense mandated that we at least outline the potential scenario of a possible developing 'C' Wave that could unfold very suddenly and without warning at any time and is the kind of action that could cause an upmove like the one we've just had, to unravel rather rapidly and precipitously. Remember, when we called this rally some two months ago, declaring it: "A New Bull Market in the Making", we were a lone voice in a forest full of Bears and now we have virtually reached the opposite extreme, where there are numerous Bulls out on the plains that while not exactly stampeding, they have definitely been snorting of late and getting ebullient about what really is a relatively narrow, low volume advance, that is often the hallmark of an impending top, so we are on high alert for indications of a changing trend soon.

Now, the one thing that could keep this going and power it higher, would be a graduating broader participation on increasing volumes, which could still potentially develop, especially if we start making new multi-year highs on the S&P, thereby negating some of these divergences.

Yesterday, we also outlined what we believe will be a more bullish scenario hence and perhaps as an indication of same, we witnessed a somewhat breathtaking turnaround that caught most investors completely by surprise, given the early negative tone and that's why we also stated that trying to define the extent and depth of any forthcoming correction could be very difficult, and because our longer term outlook is exceedingly bullish we want to maintain an overall positive bias within the framework of a potentially correcting market at some future point. 

 Research In Motion RIMM - Special Situation

One potentially very bullish investment idea unfolded Friday as Research in Motion Ltd RIMM announced blowout revenues and some humungous new subscription numbers that came in way beyond expectations at around Eight Hundred Thousand, as their new must-have Blackberrys were literally flying off the shelves. Seldom if ever has a multi-billion dollar company jumped 20% or so overnight and surpassed $100 per share in the same moment, closing in on a $20 Billion market capitalization value. And because of this truly stunning development, we are beginning to adopt a very bullish attitude towards this issue, believing it could be another Google in the making, with similar kind of upside targets, that Google delivered over such a relatively short period of time. What really and truly intrigues us, is the prospect of Dynamically Accelerating Revenue Growth that could set RIMM on an upward path, initially to the $120 level, later $150 and possibly even $200 ~ $400 or so and so we would not rule out the possibility of a $1,000 per share price tag somewhere down the road. There is massive room for growth.

However all of these numbers depend on two things: 1. The company's continuing growing market share and 2. Maintaining an edge with its products that render competitors like Palm and Microsoft's offerings second rate and that will be no mean challenge to overcome. However, it should be borne in mind, that the reason the results were so good is because this time they left the competition in the dust. If they can continue to deliver stunning new products and develop their business worldwide, the sky's the limit for this company to be the new platform. Trade Well From the Desk of Savant

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