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Fade to Red

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Is it too early to rally?

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Charles Woodson put the smack down on the University of Michigan Confidence number (83.7 vs. exp. of 87) and that pretty much makes it a clean sweep for the bears on the news front. While the natural predication is to press the short side here, remember that it's expiration and there are cross-currents that you can't see. The best fades are the hardest fades--and the hardest fade was 24 hrs ago when Saddam was supposedly teeing up at Del Boca Vista.

A quick check of the morning breadth shows losers trumping winners 2:1 (improved from 3:1). Meanwhile, the BKX has turned green and that's giving the bulls some "hope." While I respect this development and see the "S's over N's," I think the tech negatives will outweigh any potential jig in the old school. In other words, I'll likely honor my stop (if and when) as a discipline but I think you can fade the fade. Follow?

I'm seeing macro flow skewed to the sell-side as some trapped longs hit the exits but it still feels like the longs are hoping. I'd like to see a bit more fear in the bull's eyes. The longs have been conditioned to buy weakness and they've now bought the first, second and third dip. When they sell the forth or fifth dip, it may be time to look the other way.

Gotta hop.
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