Smell ya later!
Good morning and welcome back to the red and black. A week from today we'll each cast our votes and stand up to watch the flickering quotes. The tension is thick as the plot thickens more and we're setting the stage for a battle hardcore. "The tape has to firm when somebody wins," said Hoofy the bull with a shirt eating grin, "the wad in my pocket is starting to thin and the holiday shopping has yet to begin!" Will Daisy soon sport a show of support or has her phat yacht already left port? They gathered this morning with much on their plates and bantered about their disparate fates.
Boo: (putting down his muffin) Maybe I should just order a silly sandwich. I mean, honestly--what else do we need to see? The major indices are all firmly entrenched in a (bearish) pattern of lower highs and lower lows, supports have been broken, fundamental outlooks were a relative bummer (deceleration), complacency remains in vogue and we've got whine Spitzers all over the place. (turning to Hoofy) And you're gonna pin your hopes on electoral clarity?
Hoofy: (not looking up from his breakfast) Can someone please explain the wall of worry to this bear? I believe there was a book written in March of 2003 that would be a perfect tutorial.
Sammy: I understand why you're using that analogy, particularly with the big, bad event looming. But we lived in a different world then--negative sentiment was everywhere, the market was probing support, expectations were low. Further, we were about to begin the most coordinated monetary and fiscal agenda in history. Money supply, refis, rebates...most of that is in the rear-view now.
Daisy: So what does he want us to do, turn tail and go home? The sour pusses from Red Dye bring up the big picture problems every time the tape dips. Debt, dollar, derivatives...it's like a broken record that never stops skipping! (turning to Boo) I GET it...the consumer is tapped, the financial fabric is under strain and the latest spate of corporate malfeasance is another poke at the long-standing psychology bubble. But what does that mean for today?
Snapper: There are a few things to watch as we count down to the election. First, look for the reaction to the relief rally in the Spitzer stocks. With Marsh Mack (MMC:NYSE) taking quasi-proactive action, the psychology surrounding the insurance sector may buoy sentiment. It certainly won't serve as a panacea--particularly if dominos were tipped in derivative land--but it could help for the day.
Sammy: I'll also be watching Citigroup (C:NYSE)--it's been the stock tell--and the breadth--it's been the best intraday tell--as we edge forward through the muck. The financials hung tough yesterday in the face of fresh supply and they found sponsorship before the broader tape. If Citi ticks at $42, it'll break all kinds of support in point & figure land.
Boo: You guys can dabble and dance and try to romance--that's up to you--and I'll continue to follow my levels lower as a function of price. When we broke S&P 1120, I used that as a short side backstop and I'm doing the same thing now with S&P 1100. I know that we're down a bunch and folks are pointing to oversold stochastics in the old school stuff but they (stochastics) didn't matter last year (the other way). Remember, the most vicious legs of a market move occur in oversold (overbought) status.
Daisy: We're also seeing a ton of fresh earnings hit the tape but they'll likely be used for purposes of aggregate assimilation rather than psychology shaping data points. Most of the big boys have already stated their case (with the obvious exception of Cisco (CSCO:NASD)) and all radars are honing in on the election. Along those lines, please read Scotto Reamer's column from yesterday as it paints the other side of electoral clarity.
Boo got up, peeled a couple of finskis from his pocket and tossed 'em on the table. "Smell ya later," he calmly said as he put on his parka, "I see the optimists are out this morning bidding up Europe and the pre-market futures. A bear's job is never done!" He turned and weaved his way through the diner, exchanging pleasantries with the other critters along the way. The rest of the crew watched him in silence, wondering if he'll stay this calm for long. For if they knew nothing else, this particular bear has a rather nasty temper.
Good luck today.
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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