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The Truth Be Told


BAC reports this morning and BKX 800 hangs in the balance!


Good morning and welcome back to the crossfire. After a session full of sideways slither, the bovine managed to find some pep in their step during the last hour of yesterday's session. It was an impressive performance by the bulls--they shrugged off soft retail sales, a weaker dollar and incessant sable rattling by Dubya. As the closing bell rang in the background, you could almost hear Hoofy say "What, me worry?"

As I'm sure you're well aware, Intel spent the better part of the after-hours session painting the tape. While the earnings were "better," there was surely ample meat for Boo to chew on. The assessment of the environment ("no underlying economic growth) and personal computer market ("doesn't know if P.C demand is recovering) was sobering and the capex forecast was downright abysmal (although the bulls will say it's productivity gains). The one zillion dollar question for Dr. Evil and the rest of the bears is: what will the market focus on?

I find it hard to ignore macro comments like "no underlying economic growth"...particularly when they're made by the world's largest semiconductor company on the heels of a big rally. Still, perception is a minxy reality on Wall Street and when a release contains "something for everyone," investors tend to exhibit selective hearing (depending on psychology). The tape clearly "wants" to break out and the burden of proof has shifted to the bears--my question, and it's something that's been irking me, is whether the rally needs to end on "good" news (rather than bad).

At the risk of being called a bitter critter, I continue to view the upside as the cute side. That, of course, doesn't mean we can't rally--there's a part of me that feels we need to suck in the "break out" crowd before the bears are rewarded (ala the end of November)--it just means my approach to the action may differ from yours. The goal, when trading, is to have a risk profile act as an extension of your thought process. For me, that means looking to add "cheap"dowside vol as a function of price while keeping an open eye out for individual "situations" (both ways)

It's Hump Day in the city of critters and, as Intel moves into the rear view mirror, traders will focus on the next available catalyst. We've got a handful of economic numbers due out today, a flurry of earnings remaining this week (YHOO!, MSFT, GE, BAC, IBM to name a few) and some serious technical levels in our midst. Don't play just to play and, as hard as it may be, make sure you check emotion at the door. With a little patience, you'll see the seams on the ball--you just have to be disciplined.

Good luck today.

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