Coffee and Critters
I'm back, baby!
It's Monday morning in Minyanville and the critters look tan and rested as they settle into their booth at the local diner. It's been a while since they've been away from the tape for this long and, despite the smiles they shared in the south pacific, they were itching to get started in their new digs. The restaurant was filled with the usual pre-market buzz as the octopus served up the bagels with schmear and it wasn't long before the talk turned to the tape. The conversation went a little like this:
Boo: (mouth full of food) Another year, another drubbing...can't say the hat trick was a shocker! Breakfast on me, critters...it's the least I can do! Hey Daisy, nice tan babe!
Snapper: Uh, earth to Boo...2002 is ancient history. While you were snorkeling away your holiday, Hoofy's pals ripped your bear buddies a new toukas! Granted, it was a holiday week and the volume was suspect but after the dismal December, you've got to be encouraged. With a full year ahead, money managers are going to be a bit less stringent with their capital commitment. Further, the Dow Jones has only been down four years in a row once...ever!
Sammy: (delicately sipping coffee as he holds the cup with his tail) The turtle's got a point, Boo. Although, before you get all excited Snapper, I would point out that we're still feeling our way through some important technical levels. For the S&P, there is resistance in the 910-920 area and as long as it stays below 925, the dreaded head and shoulders (negative) pattern is still in effect. For the NDX, 1050 remains problematic (resistance) and until it breaks through 1070ish, we'll still be on dandruff alert. Finally, for the saucy semis, SOX 330 remains a level of contention.
Hoofy: I see those levels, Sammy, but I also see the stochastics giving some nice buy signals for both the techs and the old school. Despite the December burn, the S&P never officially broke the neckline of the head and shoulders pattern (S&P 875). I know better than to count my chips before leaving the table (looking at Boo), but that's a constructive sign. I see the resistance above, but with Dubya unveiling his stimulus package this week and the year end jitters behind us, my bovine brethren will look to make hay while the sun shines. Also, Deutche Bank is upgrading select semi-caps this morning and a few other houses chatting up the group, so that should give them some early morning ammo!
Boo: Stimulus? What a bunch of bull! Have you ever heard of buying the rumor and selling the news? There hasn't been a stimulus package from the White House this anticipated since Monica was visiting Bubba! Read my lips: the market will continue to deliver empty rallies filled with broken promises until hope is taken out of the equation. Things like the ISM spurt will happen...the market was caught off guard while it was oversold and the ranks were thinned. Sure, it could shift psychology for a bit, but a sustained rallly (turn) will not occur until discernable demand shows itself. And please stop talking about how the market can't be down again because it's only happened once in history. Show me another time when stocks like K-Tel and Presstek and Iomega rally 20 to 30 points a day and I'll agree with you that historical precedence matters.
Daisy: (nibbling on a chocolate croissant) Boo, were you not held enough when you were a cub? You're always such a bitter critter and it's really unbecoming! Listen, you could be right--this could be the early innings of a multiyear bear market. Even still, that doesnt mean that there can't be "up" years nestled in between the bad years. If there is to be ebb and flow in the market--as we see in daily, weekly, monthly and yearly price action--doesn't it stand to reason that there will be ebb and flow in mulityear trends? In other words, just because you're convinced it will take many years for the post-bubble excess to work it's way through the system, that doesnt mean it's going to be straight down. Some people would argue that would be too easy--and in bear markets, nothing's easy!
Sammy: She's right, friends, the ultimate destination doesnt matter--the path we take to get there will dictate our fortunes. As always, we'll need to take it one step at a time. This week, we've got Morgan Stanley's tech conference (kicks off today), Smith Barney's media conference, MacWorld, the Merrill Lynch services fete and the RBC Storage party this week. Also, lest we forget, Beeks will swing by with the ISM Non-Manufacturing report this morning (exp. 55.5). MacWorld, a spate of earnings and an ECB rate meeting round out a busy week.
Boo: And don't foget, Sam, there are always those catalysts that we can't see yet. As the retailers quickly learned with Home Depot's deposit, we're edging into pre-announcement season. Plus, keep an ear to the ground for Saddam chatter (negative) and developments out of Latin America. I'm telling you, despite the media coverage, our neighbors to the south need to be a focus. It's a tinder box down there!
With that, the Menagerie gathered their belongings, bundled up in their winter coats and prepared begin their new year. They've got high hopes for 2003, both in terms of the flickering ticks and in the development of their educational effort. In the months ahead, the University will start it's session, the elementary school will open it's doors, exciting features will be added to the Gazette, Minyanwood will shine bright and the philanthropic efforts for children's education will continue through the Ruby Foundation. It's an exciting time to be a Minyan and, as always, it begins and ends with our readership. It's good to be back, my friends...let's get this party started!
Good luck today.
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 firstname.lastname@example.org.
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