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ONE for the Money


So much for nap time!


We're ONE
But we're not the same
Well we hurt each other
And we do it again


Good morning and welcome back to the jigsaw juggle. If the yearning for earnings wasn't enough, last night's mega-merger has added some fluff. JP Morgan's (JPM:NYSE) massive marriage to Bank One (ONE:NYSE) has all the hallmarks of a modern day union. While everyone will get drunk at the wedding, the post-coital cuddle may not be so subtle. Will the piggies get jiggy and lead the parade? Or will Boo pull the pin on the ursine grenade? It's an action packed thriller that might be a killer so let's settle in, get to work and go drill her!

It always feels good to be wanted and, as such, Jamie Dimon must have a huge smile on his kisser. The $60 billion dollar man (Steve Austin eat your heart out) was publicly ousted by Sandy Weill and his Citigroup (C:NYSE) five years back. Now the Dimon's getting rough and calling out his former mentor in what promises to be a fight to the finish. JP Morgan was the pig in the poke last year but thanks to Elmer and his easy money, they're now using stock as an inflated currency. Talented as he is, Jamie will have to navigate this cruise ship through the proverbial canal.

The deal was struck just as the BKX is breaking out to all-time highs and that warrants respect regardless of your posture. I'm a long time bear in the group--a view that's been as wrong as a song--but if this rally is gonna end with a bang, the cannons are sounding in the street. Boo's been force fed respect and it's entirely possible he's gotta swallow another spoonful. Either way, we've been keying off the financials and the should continue to tell the tale. Wiggy piggy!

Across town, the whisper game is alive and well in tech as Intel (INTC:NASD), Yahoo! (YHOO:NASD) and Apple (AAPL:NASD) got baked in after hours trading. They all beat the Street, thank you, but estimates and (heightened) expectations don't always jibe. The knee jerk reaction was to sell the news and while overbought conditions and frothy sentiment offer cause for pause, there's still a Giddy City out there. The dip shtick, which has been a constant thread throughout the rally, has conditioned traders to play from the long side. It remains to be seen whether those vanilla gorillas will step up and stem today's tech tide.

IBM (IBM:NYSE) should help the tech tone as big blue turned the screws and "pre-released" next week's earnings report. They certainly caught traders flat footed--imagine if you were short this stock and wanted to cover before they announced? The chatter on the Street is that they wanted to squeak 'em in before tomorrow's option expiration. Why would they do such a thing? Unless they were short the $90 puts, I haven't a clue but they're running amuck in Armonk and plenty of traders are peeved.

As an aside (and excuse the rant), I continue to wondrously watch as Fed officials paint the tape day after day. If the jaw bone was connected to the hip bone, this would be the coolest administration of all-time! Yes, there is a chance that we're in the throws of reflation but when this cookie crumbles, there won't be a cockroach in sight. I'm not being a bitter critter--I am simply convinced that the current policy and the long-term health of our country are pointed in opposite directions. Nobody will question it as long as their wallets gain weight but mark my words, the vultures will circle when the tide turns.

Alas, that is then and this is now and our current cap reads "trader." The "S's over N's" dichotomy we discussed yesterday has morphed into a theme and we'll have to watch that wishbone carefully. The crosscurrents will include the obvious--financials and semis--and both will be convoluted with news. I would expect some whippy action as players figure it out and I told the critters to watch the breadth (internal health) and keep an eye peeled for continued sector rotation. Net/net, I sense they'll try to get 'em up but we'll have to see if they can keep 'em up.

Finally, for those lucky ducks enjoying warm weather, please know that the east coast is getting dumped on. New York City has accumulated eight inches (is that a Jewish eight inches?) and that'll likely thin the ranks of the Wall Street banks. As such, it may be thinner than usual today and that typically means more volatility. Noice!

Good luck today.

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