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Sneaky Freaky Friday Thoughts


At the root of yesterday's Buzz discussion was whether our current juncture is "1995 or 1999."


I was dreamin' when I wrote this
So sue me if I go too fast
But life is just a party
And parties weren't meant to last.

(Prince--or whatever he calls himself now.)

Good morning Minyans, and welcome back to the flickering pack. I'm a bit behind the gun this morning as I play ketchup on a number of behind the scenes Minyan initiatives. While I would love to place blame on our December 1 charity event (the CCA evening Festivus will be held at Country, which was just rated "top ten" in Zagat), that wouldn't be entirely true. Suffice to say there was a high profile media meld last night at the Algonquin and the Knights of the Round Table made Dorothy Parker proud!

As the Buzz & Banter is calling my name, I'm gonna cheat a bit and share some vibes from yesterday. At the root of yesterday's Buzz discussion was whether our current juncture is "1995 or 1999." The implications are massive and Minyans would be well served to think--really think--about where we are on the risk curve. I'm sure we'll pick up the thread today so, without further adieu, I'll see you on the udder side of the fence.

Todd Harrison

While there are four primary metrics, there are two primary drivers of the stock market. Fear and greed. We spoke of this into quarter-end, along with the potential that it manifests into year-end. It's entirely too early to make that call--let's worry about today--but what I'm seeing around the Street is a fear of missing.

Yes, this can last. I remember a similar fear into the last few months of '99, which lasted into 2000. If you were early, you were toasted like a burnt bagel. That's why discipline is oh-so-important and following our tells is helpful on a day-to-day basis.

A smart guy once told me never to short a chart you can't ski.

From my perch, we're still in the chair-lift.

Todd Harrison

One of my closer contacts--a folliclely challenged fellow named Snoop Tony Dwyer (who has nailed this rally)--said that he too is seeing an "I don't have a choice, I just gotta own 'em" mentality take hold. But he disagrees with my '99 analogy--he truly thinks that this is 1995-ish.

Kevin Depew

Had to step out for a bit, but returned to find quite a bit of mail on the 1995 meme Snoop Tone and I kicked around earlier this morning.

Minyan Matt asks, "Was wondering if you've examined patterns in TD (Tom DeMark) indicators during that period (1999) vs. now (or vs. 1995 for that matter). A growing question in my mind is the extent to which trend exhaustion indicators have been predictive of trend changes during periods such as like this (i.e., lifts on narrowing breadth)."

Well that's a great question, Matt. Here is a look at TD-Sequential for the S&P 500 during 1995. That is quite a trend. TD-Sequential efficacy was rather mixed. There were six confirmed sell signals during 1995, no buy signals and three produced notable moves lower while three did not. The eight sell setups illustrated how powerful the trend higher was since by definition a sell setup requires nine consecutive closes higher than the close four price bars earlier.

Here is a look at the SPX year-to-date. So far there has been only one sell setup and only one sell signal that produced only a modest sideways reaction. Quite a difference in DeMark terms.

Finally, here is a look at the SPX during 1999. There were two sell signals, four sell setups.

Stephanie Pomboy

From my macro perch 10,000 feet up…I have to nod in enthusiastic agreement with you on the differences between today and 1995. Putting a pin in the rather wishful thinking that we will repeat the one and only soft landing ever engineered in economic history, there is the (rather conspicuous) matter of credit conditions. In fact, I'm hard pressed to imagine a period in market history MORE DIFFERENT from today than 1994-5. In 1994, Fed tightening led to a massive tightening of credit conditions with the bond market posting its worst performance since 1926. This time, Fed tightening left us puzzling over the conundrum of lower rates, narrowing spreads and increased liquidity.

The rally in stocks in 1995 was fueled by the removal of the wet-blanket of retreating liquidity (tight credit conditions). It seems obvious that this is not going to be a catalyst today… quite the contrary. But…sigh… that is apparently a subject for another day!

John Succo

I can only say what I think. If you don't want to listen and dismiss me as wrong I don't blame you.

Traders are talking about the Fed's "gunning" the market for elections, some very important elections. I do know that M3 is rising rapidly into this stock rally.

Our economy is now asset based: we borrow to consume and use asset prices as collateral. This perpetuates the need for ever rising asset prices to supplant income (lagging) to continue. This requires ever expansive monetary policy which requires ever more debt to "get that money into the system."

In a perverse way you can look at it as a reason to participate. But risk continues to rise.

I can't tell you when stock prices become too risky...I already thought they were.


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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

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