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Snapper's Delight


You can observe a lot by watching.


Good morning and welcome back to the trading track. Snapper arrived in size yesterday and decided to collect on some overdue pay. He waited all day to size up the supply and then went to work with his bovine allies. "It was pretty dark before the dawn," he said as he spoke to the ursine forlorn, "and if this resistance can now be withdrawn, I think that you'll find that this rally can spawn." Is he sniffin' glue at the Minyanville Zoo or is this really something that Hoofy can do? We'll know soon enough as we get set to thrill and ready ourselves for a romp in the 'Ville.

Yesterday was a lesson in tape watching as nosty morning breadth, coupled with technical breaks in the SOX, NDX and the S&P, freaked out some early morning players. With the internals skewed 4:1 negative, it looked like the expiration magnets that are S&P 1180, 1175, 1170 and 1165 might, in fact, come into play. A funny thing happened on the way to Red Dye, however, as green seeds started sprouting in the minefield. It started with the nets, edged into the financials (paced by JP Morgan), bum rushed the drillers and, with time, began to spur the "can't get 'em down" chatter. By the time we chewed through lunch, the afternoon Snapper began to crystallize in our mind's eye.

I fielded a fair amount of calls after the close from folks looking for upside explanation. I offered that there were a TON of mechanical undercurrents in play and that likely exacerbated the volatility. That dynamic will dissipate into today's close (index futures expire in the morning) and give way to individual stock situations (pin risk when open interest is outsized relative to average daily volume). The structural metric will share the spotlight with fundamentals (earnings are coming out fast and furious) and the evolving technical landscape. Along those lines, please note that the S&P has wiggled slightly above the August '04 trendline but now faces sterner resistance at 1200. And yes, for all you tech heads, NDX 1550 has flipped back to nearest-term support.

There is alotta noise out there today as we juggle the struggle that is this Minx. After an anticlimactic third quarter close, alotta portfolio managers have yet to find fresh bearings. The energy patch--the source of jingle in alotta folks jeans--has been all ova the place. Metals--which seemed to assume the leadership baton--have stubbed their toe. The financials--coughing from all the smoke in the sector--found some footing. Tech--over-owned and, in many cases, overpriced--continues to sing sexy sirens. It's a lot to chew on, particularly when hurricanes are weekly occurrences, war rages overseas, input prices squeeze consumers and my beloved Raiders are 1-4.

While I respect the bend-yet-to-truly-break tape, I have a hard time seeing a strong holiday season for mom and pop. Heating bills and gas prices are the venerable double whammy to the strapped out consumer living on ever-dissipating disposable income. Yes, there is an upside "solution"--it's called more debt--and that's the "out" for Hoofy and, perhaps, the widely anticipated year-end rally. And, lest I'm branded a bear, I'll offer that I remain bullish on the metals and energy with a longer-term horizon. So you know...and so it's said.

On a housekeeping note, I've got some "things" to tend to downtown and will be back in the 'Ville for the lunch crunch. I would also like to remind ye faithful that we're having a football flavored NYC Minyanfest this Sunday at 4pm. We've hosted these fetes in Florida, Chicago, Dallas, Baltimore, LA, San Fran, Boston and Tuscon and they're always a good time. Please ping us for more details as we're always looking to build upon our network of human capital and share some smiles at the same time.

Good luck today.

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