Supply Side Economics
By Todd Harrison Oct 01, 2003 8:58 am
S&P 1002 and NDX 1308 are the inflection points of the day!
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.
Get The Minyanville
Daily Recap Newsletter
Daily Recap Newsletter