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The Fun House


Lake Flaccid?


And if you say to me tomorrow
Oh what fun it all would be.
Then what's to stop us, pretty baby.
But What Is And What Should Never Be.

(Led Zeppelin)

Good morning and welcome to the swarming. Like a bobcat caught in a cardboard box, the Minx rattled her way to some snazzy gains yesterday. The effort, in the face of a spate of fresh negatives, effectively pocketed two metrics for the Matador Crowd. From a technical standpoint, NDX 1635 is now underfoot and Hoofy can focus his attention on S&P 1245ish (multi-year highs and semi-staunch resistance). And in the psychiatric ward, the ability to absorb bad news has created high anxiety for portfolio managers fearing underperformance into year-end.

To be sure, there is a case to be made for Hoofy. We've paid homage to the year-end rally thesis since Boom Boom Bernanke stepped on deck and the crowd started cheering. And we've noted the all-time highs in the trannies and brokers as potential precursors to a strong '06. The parabolic frolic of the money center banks have now been added to the list of optimistic indicators as they've benefited from a rotation out of the energy patch. Yes, the "eyes" have it as we ready to roll up our sleeves and turn this seasonally strong corner.

As is often the case, higher prices have shifted the collective focus from the risks to the rewards. Still, as there are two sides to every trade, it would be myopic to ignore the underlying issues. The consumer is stretched as a function of massive debt and a dependence on home equity. Corporate America is seemingly slowing as evidenced by this less-than-stellar earnings season. And over on the Beltway, our nation is mired in record twin deficits, an unpopular war and waning confidence in our leadership.

While the timing of the comeuppance may have been pushed out, these risks will manifest-not mitigate-as we edge along the time horizon. I'm respectful of a last gasp effort by the powers that be and understand that the higher they go, the more intense the pressure of participation becomes in fund circles. It's important to maintain the proper perspective, however, as there are alotta moving parts to this market. Sentiment has shifted hard since the October lows, short-term indicators are higher than Bob Marley when he wailed and the margin of error is slimming as bears are chased from their year-end agendas.

I boarded Rotation Station yesterday and laid out some shorts in the money center banks while nibbling on some ketchup plays. That may be wrong-it certainly feels wrong-but the logic is predicated on the notion that any ursine embers will ignite in the areas of structural smoke. The risk to that trade is the elasticity of debt and the potential for easy, cheaper money coming down the pipe. Liquidity has drowned more bears than Lake Placid, we know, so Boo knows better than to blindly believe in his insulated bunker.

We power up today's pup to find a sticky green Europe, mixed metals, a flat dollar and nondescript stateside futures. Crude remains a focus in the mainstream media although it's a dicey catalyst for equity traders (my nonsensical sense is that the energy bulls will circle their wagons near crude $53 and I plan on scanning for longer-term adds if and when we get there). NDX 1635ish becomes new support in four-letter land while S&P 1245ish is all kinds of resistance (four year highs and Fibonacci retracement).

Hit 'em hard, Minyans, and let's end this week with some jingle in our jeans and a smile on our puss.

Good luck today.

positions in select financials, metals.

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

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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