Dow Jones 9418.00 -5.68 10:00 am PST, August 22, 2003  NASDAQ 1782.46 +4.91 For info, visit access.smallcapnetwork.com S & P 500 991.71 -3.56 To be removed, please click here Russell 2000 488.25 -6.57 VOLUME 03: ISSUE 47  Intel: Much ado about not much.  So, Intel (NASDAQ: INTC) has raised its third quarter revenue guidance by about 5 percent. To listen to the media early Friday morning, you'd think it was a revelation of near biblical proportions. Intel's projected revenue median for the quarter went from $7.2 billion yesterday to $7.6 billion today. The share price moved almost 10 percent to $28.55 at the bell, Friday. According to all the talking heads and analysts --who can mobilize with frightening speed--the good times, have returned. I guess the fact that INTC's share price has almost doubled since this past March is merely a matinee. I smell a trap. Ok, so let's say that the First Call earnings projection for 2003 and 2004 moves up to 70 cents and 90 cents respectively as a result of today's pronouncement. Currently, analysts are projecting 62 cents and 81 cents. Under the hypothetical raised earnings scenario, the shares, at $28.50, are trading at a forward price earnings ratio of 40 times for fiscal 2003 and 32 times for fiscal 2004. CNBC called the opening market action, courtesy of Intel, a tech 'love-fest'. Oh, please. Intel Good. Sentiment too good. I will be the first to admit that Intel is a great company. Is any other sector influenced by a bellwether company as the tech sector is by Intel? The majority of the tech stocks rose in unison on Friday, lifted by Intel's raised guidance. Bottom line: everyone is bullish and the markets have already moved a bunch. And that makes me nervous, although I am constructive on the markets mid- and long-term. Trading at $15 in March, the smart money got into Intel early and the shares have since scaled the wall of worry that's characterized both the markets and the semiconductor sector. Hell, even the Philadelphia Semiconductor index has almost doubled since March, from 270 to 455. The risk now is that behemoths such as Intel fail to deliver in even a single quarter. While the present Intel news is good for the market overall, it's hardly the cure. If I owned Intel and had been in for the recent ride, I'd sell some. Probably half. Looking over some sentiment indicators, it appears that there is virtually no negativity in the market, short-term. A scary development, as it reveals a market that could go either way and--as we've seen with the Intel announcement--is extremely sensitive to news, no matter how inconsequential.  It ain't this easy. So what to do? Nothing that we haven't stressed before. Although, given the bon temps we are experiencing in the market, I would have a serious look at a small position in the QQQ (NASDAQ: QQQ) puts as a hedge. The November puts, with a strike price of $32 are trading at around $1.40 a contract. That means that if the QQQ drops back to $30 short term, the contracts will be likely be worth $2 plus, depending on the time remaining on the contract. I'm not suggesting a massive purchase, but some insurance is likely warranted. If you're wrong, you won't care. If you're right, well... The QQQ's have been on a march upward since March, with a nice back and filling action characteristic of a relatively stable market--lower lows, higher highs. Over the last couple of weeks, the NASDAQ tracker has surged 10 percent on lower volumes. Some caution, at least short term, would be prudent. The NASDAQ has moved from 1250 in March to almost 1800 Friday, a nearly 50 percent move. The easy money is made when everyone else is bearish, which they were then. The risk increases as the latecomers dive in and pronounce the market can now do no wrong well after the fact.  Watch yourself, gentle reader. Could the markets move higher? Sure. Has the risk of a pullback increased? Sure. Does Intel's announcement this morning make any difference? Perhaps, but likely only for Friday's trade. Investors need to be strategic. Just because the media repeat the Intel story every 48 seconds doesn't make it any more than a minor blip. It just makes the media repetitive on a slow news day. The real concern is that the saturated coverage feeds an optimistic view of the market that may not be realistic. Be strategic and always use protection. Have a look at those November QQQ puts or others in the series.  September and October, lest we forget, can be ugly months in the market. I'm sure you'll have comments. 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