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Thirteen Black Cats

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We could see at least one bounce as the S's are opening AT the 200-day.

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When you believe in things
That you don't understand,
Then you suffer,
Superstition ain't the way


(Stevie Wonder)


Good morning and welcome back to the creaking crack. With yesterday's snoozer in the rear-view, the critters are ready to battle anew. The timing is perfect for earnings galore as traders are thirsting for action hardcore. "The charts seem to be at inflections en masse," said Daisy the cow with her usual sass, "if we're gonna see some mojo that lasts, the bulls need to step to the head of the class!" Are Hoofy and friends getting ready to feast or will Boo and his crew put a fork in this beast? It's Tuesday, it's earnings, it's time for a thrill so roll up those sleeves and let's romp through the 'Ville!

I sat here this morning looking at my eight screens and wondered if we've covered our bases into these races. We know about the book-end 200-day's (S&P 1120, NDX 1440), we've touched on the lack of motivated selling pressure (Lowry's), the horse has schooled us on corporate bond spreads, complacency and hope are hand in hand, the election is a toss-up (in more ways than one), commodities are green, "13's" are red, crude will only matter when it does, jobs are sparse, money is easy, I'm hungry and the specter of terror (into the polls) is almost taboo to discuss.

While oil has been the obvious focus today, it seems that everyone is waiting for earnings to tilt the scale so they can rush to join the winning coin. It is, after all, the last reporting season of '04 and the conference call squall will be the final seed planted in the mindset of analysts. But to add spice to an already minxy mix, corporate America won't even be on center stage. For no matter how good, bad or utterly indifferent the collective vibe is, investor eyes will wander towards the most important presidential election of our lifetimes.

Along those lines, and just so I say it, my sense is that both candidates should be careful for what they wish. In addition to a hostile global environment, the next four years will offer the inevitable sobering of our punch drunk love. The bullish case for the market isn't that the conditional elements in place won't eventually matter, it's simply that the Fed will continue to pipe in the juice to keep her nice and sauced. But sooner or later, whether it's via intervention (ironic!) or exhaustion, the business cycle will continue with a thrusty bust that is equally opposite of the zoomin' boom that was our bubble. And I pity the fool who has to wake up with that on their lap.

This is an interesting time for our nation--we're as divided as we've been since the days of free love and Kent State. And make no mistake, there will be plenty of finger pointing when things don't turn out as expected and the winning party is held to task. This has all the makings of playing the pin to the long-standing psychology bubble and when faith begins to drain--this could take years--that's when "it" will finally matter. And when that time comes, the secular trends we've been discussing (metals/energy/dollar) will seem as intuitive as the net names did at the height of the euphoria.

Oops, there's that tangent again--sorry about that! There is surely a ton of trading to do between now and then and I'll return my gaze to the steps immediately in front of us. In that vein, we power up this Tuesday pup to find crude pushing north (I just took 50:1 that we'll see a $42 handle by the election), the dollar up 60 bips, base metals are off across the board, Europe and Japan were both slippy (remember those sell signals last week) and the stateside futes are heavier than Johnny Bravo. The vaunted S&P 200-day (1120) will be tested on the opening--keep it on your radar and use the internals as a guide.

Good luck today.indeed.

R.P.

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