The Tuesday Shine Box
Mess with the bulls and you'll get the horns!
"Oh I like this one... One dog goes one way, the other dog goes the other way, and this guy's sayin', "Whadda ya want from me?'"
--Tommy DeVito, Goodfellas
Good morning and welcome back to the crowded shack. There's a lot going on so let's jump on in and fire it up for a fresh Tuesday spin. We've had today circled on the calendar for a long time and for good reason. We've got an avalanche of earnings on tap, Elmer is hiking into the sunset, Dubya is on damage control and the world's speculative proxy will Google "relative expectations" after the bell. Fun? If you like saunas and haircuts today is all you, so move over rover and let the critters take over!
I've been known to spin rhythmic rhymes but information overload and A.D.D don't make for good bedfellas. So, in the interest of time (and money), I thought we could hop around a bit and touch on several pertinent points. As always, and as most of thy faithful knows, the "pure trading stuff" can be found on the Buzz as we chew through the dew with real time flava. This morning's opener? Hopalong Toddo.
- While several generals (GE, Citi, Intel, Amgen, Home Depot, Texan) have messed their beds, the broader averages (above S&P 1275 and NDX 1705) and a slew of sub-indices (near all-time highs) are putting on a brave face. Technicals are but one of four primary metrics but a wise man once said that charts don't lie (people do).
- Volatility. After a 25% spike during expiration week, the VXO has coughed up most of that move. I remain of the view that compression (as traders swap leverage for movement) has created a chasm between perception and reality as risk increases (not decreases) across the board. We continue to see volatility around the globe--commodities, currencies, fixed income--and it's a matter of time before that rolls into equities.
- Jeremy spoke in class today! Jeremy Grantham, Chairman of GMO, penned a thoughtful quarterly letter that is most worthy of a read. His outlook for (the first nine months of) 2005? "Cash and more cash!" or, "...as much cash as your career risk will allow you to, which usually is not very much."
- Ode to Elmer. Alan Greenspan will step down from his FOMC perch today after a long and illustrious career. The mainstream party line is "Way to hum baby, you da man!" but I've got a slightly different take on his tenure. It's not obvious now (or yet) but my sense is that his legacy will drift from deity to doubtful to dubious with time. Perhaps he's got a career as a spokesman (Mr. Bubble?) but my attempted humor masks a deeper and disturbing problem. We've dug a rather deep hole for ourselves and if we don't grab a shovel, our children (and their children) will be left with a mess unlike anything we've ever seen.
- Mini-Minyan Mailbag. "Toddo- I have no special insight into what silver prices are going to do and no specific problems with your rationale, but are you not ignoring your own advice of "never anticipate the anticipator?" Minyan George" MG- Great question. I've been on the metal (and energy) long-term wagon for quite some time and my sales yesterday seem somewhat counter-intuitive. And they may very well be. But one of my ten trading commandments is "adapt your style to the market" and I erred to the side of caution. Perhaps I've erred in general but I'll offer two thoughts: 1) opportunities are made up easier than losses and 2) I reserve the right to buy back my silver exposure.
- Live from MatadorCity! And finally, so you know and if you care, I stumbled across the video that was playing in the MatadorCity locker room last night. I'm unsure if this has any pertinence to today's market but it may offer valuable clues as we fish our way through the fray.
Good luck today.
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