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Dells and Whistles


Dell, Dudes and Dukes & Dukes


There's battle lines being drawn
Nobody's right if everybody's wrong
Young people speaking their minds
Getting so much resistance from behind

(Buffalo Springfield)

Good morning and welcome back to the creepy shack. A spanking new week arrived yesterday as Hoofy enjoyed a minxy buffet. He managed to climb on top of resistance but wasn't prepared for the shark in the distance. Just as he started to collect his chips, some late day supply altered the script. And no sooner did he arrive at the bell when all hell broke loose with the warning from Dell.

In many ways, this latest fundamental flop is the best thing that coulda happened to our bodacious bovine. After all, given the massive yawn on the back of Microsoft, this is yet another opportunity for the Matador Crowd to strut their stuff. If--and this is a mighty big if--the tape can shrug off this latest bellwether bump, yellow flags should morph into white towels. Am I rationalizing? No shot Bob, I know better than to view these misses as overt positives. I'm simply conscious of the potential that the "can't get 'em down" choruses will echo loudly if Boo can't capitalize on this news.

Consistent with my long-held belief that the mechanics of the swing are more important than the results of the at-bat, I rolled up the stop on my metaphorical bull costume (50% conviction on the long side) to just below S&P 1195. My thought-and yes, there were some--was predicated on the possibility that the pop above S&P 1200 was a false shakeout breakout (we rallied directly to S&P 1210, the 50-day and the downtrend line from the September highs, and failed). That's the upside level to watch as we dig in our heels and ready for Elmerfest.

Of course, with the 2:15 meeting sitting squarely on our radar, today's trade will be a tale of two tapes. Another 25 bips is a given and, more likely than not, the language will remain constant. The critters will sniff for clues in the muse, obviously, as speculation grows that Elmer will punctuate his term by stuffing 50 bips into Santa's stocking (to give Boom Boom some room). The question that I really wanna know is, when will these rate hikes finally and feverishly affect a consumer complex tied to adjustable rate mortgages and dependent on low rates?

First things first, we've got a tape to trade. Please keep an eye on Duke & Duke as the brokers broke out to all-time highs yesterday. XBD 181ish is the level to watch on any retest and the action in the financials (after the rate ratchet) should pave the way for the broader fray. You know how I feel about this complex from 40,000 feet (danger Will Robinson) but, for purposes of providing today's tea leaves, I'm watching 'em alongside you.

Good luck today.

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