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Monday Morning Quarterback

By

Here comes the Texas Two-Step!

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State of the Tape

Hoofy put on a happy face last week and shrugged off a spate of geopolitical concerns (Hamas, Iran, Iraq,Venezuela) and some less-than-thrilling input from Beeks (GDP) to recapture the expiration week slippage. In the process, or perhaps because of it, the Minx managed to mount the technical humps at S&P 1275, NDX 1705 and BKX 103 while setting all-time highs for the brokers (XBD), Gold bugs (HUI), Mid-caps (MDY), Russell (RLX), Drillers (OSX) and the Oil Index (XOI).

With technical affirmation in hand, the rather loud Matador Crowd will turn their attention to the avalanche of earnings and Beltway banter that's coming down the pipe. As the Tuesday two-step will feature Elmer hiking into the sunset and Dubya steppin' on stage, today's fray may feature more posturing than positioning. The bovine will naturally look to past resistance as new fangled support on any and all pullbacks in the near-term.

The Market is a leading indicator, we know, and the conventional wisdom dicates that the tape is discounting the past (earnings) and present (news) to focus on the future (end of the rate hike cycle). All the while, compression builds under the system (VXO 11ish) as traders replace motion with leverage. When that "matters" remains the question on the lips of the critters. Risk management, coupled with conscious awareness and proactive patience, remain staples of any successful investment approach.

The Two Sides of the Trade

On Friday's Buzz, Hoofy and Boo snuck into MVHQ to offer their take on the tape. At the risk of content regurgitaion, I thought it might be helpful to share their fare on a minxy Monday morning.

Bovine Bravado
By Hoofy the Bull (1:06 pm)

I'm slammin' today but wanted to scribe a quick vibe to remind you to stay disciplined. You may not agree with this rally but you'd be wise to respect it. Alotta traditional tells--market breadth, leadership, technicals--are pointing towards Matador City. Toss in the rising tide of global liquidity and you've got a recipe for higher prices.

I see (and respect) the laggy leaders--Google, General Electric, Citigroup--but I was taught that a rolling rotation beats an outright migration any day of the week. With S&P 1275 and NDX 1705 morphing from resistance to support---and all-time highs in a bevy of sub-indices--the ball is back in my court.

And yes, Boo, there is alotta bad news floating around. But an ability to absorb that sorta stuff is traditionally a sign of a strong tape. Respect--don't defer--and see both sides of the ride

Gimme a Break!
Boo the Bear (1:06 pm)

So, Hoofy's bullish, eh? Seems kinda redundant given his breeding. Whenever the market rallies, the bulls get loud and the bears are labeled bitter critters. What about the fact that, despite this snazzy rally, the S&P and NDX are lower than they were last Friday morning? The troops are rushing up the hill while the generals lay wounded behind. That's not a rolling rotation, that's a warning sign. You never saw William Wallace sit one out, did ya?

I may be A.D.D but I'm not blind. There are some strange things afoot as Elmer gets set to step off stage and Dubya readies for his scripted speech. And they said America lost its manufacturing sector. Are they kidding me? They've manufactured an entire existence! The market is the world's largest thermometer and jinglin' jeans tend to mend fences. Yeah, it's easy to love thy neighbor when everyone lives in Matador City.

Call me bitter. Call me Susan. I don't care. Just don't call me for the bandwagon cause I don't play that way.

Random Musings

  • While higher tapes morph the collective attention from the negatives to the positives, let's remember that select generals remain stuck in the mud (under resistance).

  • One of the oldest adages on Wall Street is that "when the President is in trouble, the market is in trouble." Dubya might not be in the Principal's office yet but Dick Vernon is surely watching.

  • While my financial proxies of choice are the BKX and XBD, toss XLF 30 (financial spiders) on your radar as support underneath.

  • And on the heels of the latest break from General Electric (under $35), "see" GE $32.5 as another important level.

  • Silver was up 11% last week on its way to a 19-year high. It "should" struggle with the big round number ($10/oz) but, as my time horizon is longer-term, I think this precious metal ultimately has more room to run (after a potential consolidation).

And Finally, a Mini-Minyan Mailbag to chew on...

Toddo-

I hope this finds you well and you are enjoying your two day respite. I work behind a small bar in a restaurant in Hilton Head South Carolina. There were two nice couples there this weekend and the guys and the gals had their own conversations going as they had a couple beverages of choice to unwind and enjoy their visit to the beach (they were from Charolette, N.C.).

Well here I am, working on paperwork at the same time and one of the gentlemen starts telling his friend how he has to check out Minyanville (they had been talking about stocks for a while) and trying to name all the critters. As he paused trying to remember a couple of them, I looked up, smiled and helped with the rest. He asked if I was a minyan TOO?! As it so happened, the T shirt I was wearing that night (under my vest) featured our buddy Boo, which I PROUDLY displayed, followed by a brief discussion on the merits of being a Minyan and why his friend HAD to check out our community.

So I thought I would send off a quick note of bright light as you continue the struggle to put out meaningful financial education.

Be well my friend.

Minyan Jeff

MJ-

I just got to MVHQ for some Sunday ketchup and saw your note. It is, indeed, a ray of bright light as we continue to build the Minyan Nation. While you may "see it", you ain't seen nothing yet--and I offer that in the most humble way possible. It's been a long road, this critter thing, but we're just NOW edging out of the gate. I truly believe this is "Walt Disney meets Wall Street" and the roots will reach from pre-school to old school and the ABC's to 401k's. We've clearly gotta lotta work ahead of us but with Minyans like you watching our back, I am confident we'll get there. Together.

Enjoy the rest of the respite!

Toddo

And with that, I'll wish ye faithful good luck this week.


R.P.

position in financials.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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