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Engine Room, More Steam!


NDX 1515/S&P 1140 are first supports and NDX 1560/S&P 1150 is initial resistance.


Well I'm a steamroller baby
I wanna roll all over you
Yes I'm a steamroller for your love, babe
I'd like nothing better than to roll all over you

(James Taylor)

Good morning and welcome back from the sack. After juggling balls and yesterday's calls, the critters are ready to go hit the malls. "This long earnings streak is not for the meek," said Daisy after another tough week, "And Fokker! He'd speak of his trading technique but his eyes never left my curvy physique!" Have we all lost our mind from this hard Minxy grind? Or is this the news that gives sight to the blind? It's freaky Friday (and all none too soon), so lace up those shoes and let's dance to this tune!

First things first, Harry Potter & Co. painted the tape last night and there was a little something for everyone. Microsoft (MSFT:NASD) beat the street and upped guidance but, once again, the deferred revenue line item stuck out. If you recall, that was the fly in last quarter's ointment and analysts were quick to jump on the issue once more. Further, CFO John Connors (I'll be back!) offered that the coming year will be "challenging" and revenue growth will likely abate. Low ballin'? More likely, he's coverin' his bases in far away places.

Kla-Tencor (KLAC:NASD) and Amgen (AMGN:NASD) were other reports of note and they should lead the all-important semis and biotechs today (respectively). The SOX (semis) have been under pressure since their acne popped (false breakout) and money rotated to the financials. Supply has filled in with each lift (of late) so it'll be interesting to see if this is the half step back (before a giant step forward) or the start of more substantial distribution. In the biosphere, this sector has also been earmarked as a breakout candidate (deja vu) so watch the action in the BTK (biotech index) on the heels of last night's release.

With the lion's share of the fundamental news now in the rear-view mirror, traders will begin to focus on the other metrics (technicals, psychology, structural). A massive outlier (either way) would have surely shocked stocks but in my view, the fundies aren't the current focus. Rather, there's a game of hot potato between the technicals and psychology and that's operating against the structural backdrop. While the sideways churn must be considered healthy (after a torrid run)--and big cap charts "look" jiggable--I maintain that psychology may very well be the biggest bubble out there.

As I was reading Breakfast with Brodsky (this kid is good), I couldn't help but wonder who that "mysterious" bear was. I was, after all, in attendance and certainly agree that things look best at the top (and worst at a bottom). That's the fulcrum of denial-migration-panic and, while those cusps are dangerous to "game," it is the process in which trends, phases and cycles evolve. I agree with Adam that past performance is no guarantee of future return (and timing is everything), but I would urge him (and all of you) to remember the lessons learned during the bubble. The excesses not only created overcapacity in the system (that's being carried like a punch drunk fighter), it also offers a dangerous basis of comparison. That's not necessarily a thought for today but ignoring could make for troubling tomorrows.

We power up this Minxy pup to find Europe, gold, the dollar and the stateside equities all on either side of the flat line. You can't blame 'em for being tired--I know I am--but suck it up and stick it out, Minyans. We've got seven hours before we turn it off, tune it out and skip into our requisite two day respite. Let's end this week on a positive note and hit that closing bell with a smile.

Good luck today.

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