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Monday Morning Quarterback


All these questions--and more--are waiting patiently on deck and the answers will arrive in the form of a bottom line.


"Weave? I don't even know how to knit!"

Good morning and welcome back to the flickering pack. We awake this morning with a bit of a hangover. No, not due to an invasion by a gaggle of grey geese--they're already South for the winter--this purple haze is purely a function of triple witch expiration. As is typically the case after Friday option funerals, "squaring and paring" will likely take some time to shake out the cobwebs and find a true tenor. And, judging from what we're spying in the overnight futures market (a massive trade seemingly took place), today's sobriety test may take a bit longer to come to pass.

Last week was all about the Benjamins. 120 of them to be exact. With all the focus and frenzy on DJIA 12,000, the catalyst calendar, a convoluted affair that married earnings, expiration, FOMC jawboning and geopolitical confusion, morphed into one of the more anticlimactic "big weeks" in recent memory. It was sorta like The Departed, which I saw Saturday night. A great cast, some fantastic action and alotta promise. In the end, however, it left you wanting for a more definitive finish.

An encapsulation of the tape was brought to bear on Friday, when the bulls were convinced that Google (+36 points) would spur the upside herd on the back of earnings. The bears, for their part, pointed to Caterpillar, which used to be the poster child of strong economic growth. After a tepid forecast that sliced a meaty 14% from its market cap, Boo's motley crew woulda thunk it was a wake-up call for the blind ambition crowd.

So which is it? Is what's "good for Google," good for...Google? Is the reaction to bad Caterpillar news (group shrug) more important than the news itself? Did expiration influences save the tape by providing stickiness for the broader market and, if so, will the real stock market please stand up, please stand up, please stand up? All these questions--and more--are waiting patiently on deck and the answers will arrive in the form of a bottom line.

A few Random Odds and Ends...

  • Barron's asked the question: Can the NASDAQ (50% below its peak) get its mojo back? My response, should I have been queried, would have been that tech is over-owned (in many cases, with a higher cost basis), which is why I believe energy and metals will out-perform tech and financials (the highest weighting in the S&P) for many years on a relative basis.

  • Catalyst calandar: Get set for the second wave of earnings, FOMC Tues-Wed and posturing in front of midterm elections.

  • Performance anxiety into year-end or a potential bottleneck (if folks try to get off the highway). The script is still being written but I sense that the US dollar will play a big role in that decision making process.

  • I humbly offered last week that the '06 high could arrive between October expiration and the midterm elections. If the greenback gets an upside groove on, the odds of that happening will increase in kind.

  • If the dollar fails, I would expect energy and metals to re-establish their upside leadership moxie.

  • And finally, Minyans likely got an email regarding the December 1st MIM-CCA. Please know that the entire cost (minus $125) is tax-deductible as The RP Foundation is a 501c3 non-profit organization. Further, for out-of-town Minyans looking to lock a hotel spot, we've got some rooms on hold through November 1st. Thanks so much for helping us give back to the community and shape the leaders, healers, dreamers and thinkers of tomorrow!

Good luck today!


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Position in financials, energy, metals
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