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Hook 'em Horns!

By

My Hero!

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Well I ain't never right but I never been wrong
As everything works out the way it does in this song
Cause once in a while you get shown in the light
In the strangest of places if you look at it right


(The Grateful Dead)

Neil Glassman, one of the classiest guys I know, was quick to tell me that Buddy Holly (not the Stones) first penned "Not Fade Away" in my last post. I would normally argue the point with my follicly challenged friend but, as he actually grew up with Buddy in the 50's, I'll give him the benefit of the doubt. I now owe him dinner...which should set my back $3.99 at the 4:30 dinner seating at his club! Oy!

Speaking of early birds, I promised myself that I would count to 100 (backwards by primes) this morning before initiating risk. The fade trade made (makes) sense, in my mind's eye, as the bipolar ambition crew flipped from cheers to jeers in a heartbeat. The trick--and I think this is very important--is to factor field position into the mix.

This is the fifth straight day that the S&P is lower and critical levels are rarely breached from oversold (overbought) conditions (see BKX 800). I have obvious concerns from 40,000 feet and, ultimately, I think these levels are dust in the wind, dude. However, as we focus on the journey rather than the destination, I'm happy with Hoofy as long as my risk is defined.

The problem, thus far, is that the internals can't turn the corner (been a tremendous intraday indicator) and the financials continue to take it on the chin. Once again, and consistent with yesterday's theme, the N's are outperforming the S's and, if the tape turns higher, that complex is likely to lead. Neil (feeling confident now) points out that there's not much fear in the street and I don't disagree. My sense, however, is that the complacency is more of a problem for the broader trend (and not the nuance where I currently live).

The earnings last night did nothing to change the fundamental backdrop (in my humble opinion) but, as we know, it's a numbers game. Wall Street's expectations were lowered to levels that were "attainable" and, as these companies met reduced forecasts, everybody cheered. That's kind of like saying I want to get my weight down to 200, I can do it, but I'm only really fooling myself-and I'm still fat at the end of the day!

And so it goes...I continue to hop around with one leg in my Collier Diamond C Ranch quality bull costume (25% conviction on the long side) and, if I see any jig in the today's trading tells (or we get closer to the drop zone), I may add another. Either way, and this is the critical element, I'm going to adhere to a strict stop if "my" level is broken. According to Tom Dorsey and the rest of his saucy crew, the break "confirms" at S&P 865...so you know.

Hope this finds you well, cookmo.

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