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Supply Side Economics

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S&P 1002 and NDX 1308 are the inflection points of the day!

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Good morning and welcome back to home stretch. After six months of gains and Boo's insane pain, September ended with a south side campaign. The bovine bumming was a long time coming and the bears left for home while singing and humming. Is this the start of the financial fart or will the ursine uglies soon depart? It's a new inning and fresh beginning so settle in, friends, and lets start winning!

The definition of frustration is repeating the same task over and over and expecting a different result. That pretty much sums up the Boo's year as he pounced on each bounce and was trounced and renounced. That process, in a addition to handsomely rewarding the dip buyers, has also conditioned the bears to run scared. As discussed in a recent column, that sets the stage for the denial phase (as a precursor to migration and panic). It doesn't mean the fugly follies has to start right now, of course, but the curtain is drawn and the house lights are on.

We're now in the fourth quarter and, by definition, the second half recovery should be cooking with oil. That puts additional emphasis on each economic report and, more importantly, the upcoming earnings season. In addition to the added pressure of that newfangled performance anxiety, the supply side of the equation has also ticked higher. There has been a rush of filings for equity IPO's and secondary issues of late. As a matter of fact, the secondary filings are at the highest levels since (drum roll please) March 2000.

We power up our systems this morning to find some rather anemic bourse bounces across the pond. The German Dax, for instance, is down 10% in the last eight sessions and is currently struggling at the flat line. I know we're a world away but, again, if we Deutsche marked (during the same time period), the S&P would be sitting at 936. Indicative? I'd prefer...perspective.

As a function of the late day slippage, the S&P, NDX, Dow Jones, BKX, SOX and BTK (biotechs) are now below their respective 50-day moving averages. While that may prove to be short lived, it's certainly worthy of a scrunched nose. If we are to constantly monitor our metrics, the technical element is a potential red flag. I still believe that psychology is the dominant metric (bubbly optimism) but the charts are certainly a part of the assimilation equation.

Finally, I would like to wish Hoofy, Boo, Snapper, Sammy and Daisy a healthy and happy first anniversary! One year ago today, they made their big screen debut and, man, what a year it's been! I would also like to thank my fellow Minyans for the good vibes that have been the constant thread of Minyanville. I know the critters appreciate it--and so do I.

Good luck today.
No positions in stocks mentioned.

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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