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Good morning and welcome back to the Columbus Day snack. The bond guys are off and most banks are closed but the Minx remains open and somewhat exposed. With last week's late dip, some levels gave way and opened the door for an ursine soiree. "Remember how jazzed they were when we popped?" asked Boo to his crew right after we dropped, "the upside momentum seemingly stopped and it looks to these eyes like the market has topped." Can the forgotten bears usher in a new scare or will this quick spill be a one-time affair? We've got earnings on tap and lots on our plate so let's settle in for our minxy debate!
There is certainly no shortage of ajita floating around Matador City. Higher oil prices are "taxing the disposable income of U.S. consumers and threatening to hinder economic growth" (according to an always optimistic Treasury Secretary), retail sales remain sluggish, public confidence is being tetherballed by our politicians, terror jitters remain (Israeli intelligence has blamed Al Queda for last week's Sinai Peninsula bombing), layoffs continued to manifest (Bank of America (BAC:NYSE) and AT&T (T:NYSE), the CRB is at a 23-year high and the NDX cut through its 200-day support and removed the catalyst for a slew of technicians.
While that's enough puff to make the average bull ing)" target=_blank>schvitz, the market is rarely as simple as it sometimes may seem. With the ability of the S&P to hold ITS 200-day moving average, the optimists enter this earnings season with a quiet confidence. Further, the ace in their hole during the entire echo-bubble has been the structural metric and Elmer's mantra of easy money. That stimuli has skewed the supply/demand dynamic of global financial markets and it continues to remain a force to be reckoned with. The roadmap in that regard has been the tightness of the corporate markets and our credit cousins remain particularly sanguine.
So what's a trader to do? If one believes that bear markets are dominated by haphazard price action and widespread frustration, it may make sense to open our stance and broaden our horizon. Indeed, active traders have spent the better part of 2003 pressing, stressing and altogether messing up an already difficult dynamic. Those with an elongated look, however, have had a rather rewarding experience on a number of fronts. Identifying secular trends (metals/energy) is the step towards profitable performance but identifying crowded (read: edgeless) arenas is equally enriching. Remember, Minyans, the ability to adapt is one of the most important trading commandments.
Fundamentals will take center stage this week as corporate America delivers the last earnings avalanche of '04. While today will likely focus on technicals (200-days) and posturing, conference calls will soon dominate the landscape. Intel (INTC:NASD), Johnny John (JNJ:NYSE), Mother Merrill (MER:NYSE) and Yahoo! (YHOO:NASD) are on tomorrow's tap and those names--and their respective industries--will likely be the most manicured in preparation. It's all about the three E's--earnings, Elmer and the Elections--and this space is about to get pipin' hot.
We power up this holiday pup and find that the world is sleeping late. Europe, the dollar and metals are all on either side of the flat line as the Nikkei and fixed income are enjoying a three day weekend (lucky ducks). Stateside futures are similarly snoozy although they promise to get their groove on once the opening bell tolls. Please note that the S&P closed Friday sittin' on the 200-day moving average and S&P 1120 remains a focus (if not the focus) as we trade ahead.
Good luck today.
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