Daisy: It's a beautiful morning, isn't it? The air is brisk, the leaves are falling and we're all together. I love autumn!
Sammy: Yes, Daisy, October is a beautiful time of year...although it's typically an ominous month for the market.
Hoofy: Au Contraire, mon frere, this is a seasonally strong period for stocks and I don't see why the recent mojo won't continue. Yesterday was a healthy pause to refresh, the positives for the market are still there and I'm sure the buyers will be back.
Boo: Uh, earth to critters...what positives? The alligators (asset allocators)? You should never target catalysts you can't see. The technicians? They're bullish until we go lower, at which point we've broken down and they'll turn negative. What good does that do? The fundies? No shot. After listening to these companies speak for the last few weeks, it's pretty obvious that nobody has a clue when this muck is gonna end. Sure, there were a few solid quarters but, net/net, there's still no visibility and pricing power seems to be a continued concern. The psychology has swung full circle and now, instead of selling rallies, traders are conditioned to buy dips. Somebody call Toddo...we need a groundhog!
Snapper: Not to be rude, Boo, but you sure have a short memory. Remember Wednesday when I ate your lunch? What will it take for you bears to give the upside a little respect? You've been getting fat off the land for two and a half years and it's only natural fro the market to wax and wane. I mean, jeez, keep it in perspective...even after this rally, we're still below summer levels!
Boo: Yeah....which is negative. That's what I don't understand. All these technicians are running around like they've discovered Texas tea but, as of now, we continue to make lower highs...would it really shock you if we made lower lows?
Sammy: Listen guys, every time we get together, it's the same conversation. Everyone take deep breaths please. If you try to take everything in at once it will likely overwhelm you. Can we just focus on today? We've got Beeks dropping off the economic data starting with Durable Goods at 8:30 (exp. -1.6%, ex trans -.3%), the Wolverine Confidence number at 9:50 (exp 81) and New and Existing home sales at 10:00 (990k, 5.35M).
Daisy: Listen to Sammy, guys...you're always so impatient! Take it one step at a time and one trade at a time. If I were you, I'd be watching the financials, including specialty finance and the brokers, as they continue to hold the key to the tape. The Brazilian elections are this weekend and there are rumblings of more accounting woes, so this group is a great proxy. Also, Household International (HI) priced a deal last night, so watch that name to see how it trades in the face of that supply.
Sammy: I agree. The SOX is also going to be important today as UBS Warburg downgraded the semicaps. This complex is a very crowded battleground but remains a good tell for the Nazz. Peripheral tells today will include General Electric, Microsoft, Cisco, the biotechs, the bonds and, of course, our trusty internals.
Snapper: Jazzy man! Thanks for the help as this sure is a tricky tape. Don't forget, Toddo is going to the oral surgeon early this afternoon so he'll be posting in the morning but then he's probably done for the weekend. He sure is gonna look funny with those puffy cheeks!
The food arrived and the critters dug into their breakfast. They bantered about in their usual fashion and the conversation turned to their beloved Raiders and their big game Sunday. As much as they loved to talk tape, nothing beat quality time with good friends. There would be plenty of time to work today and they knew that balance brings clarity, and clarity brings perspective.
See you after the opening.
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 email@example.com.
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