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Love for Sale!

By

Poser!

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You see the signs, but you can't read
You're runnin' at a different speed
You heart beats in double time
Another kiss and you'll be mine, a one track mind


(Robert Palmer)

Good morning and welcome back to the love shack. The bovine are dressed and ready to play in what they seem to think is a year-end soiree. They've trekked from the drek of the October lows and haven't stopped since, not even to pose. "Just look at the banks, they tell the whole tale" said Hoofy the bull from the Matador trail, "the longer they slither without a fail, the better the odds that my team will prevail!" Can he self-fulfill on his quest for a thrill or will Boo Barbeque his arse on a grill? It's turnaround Tuesday, come one and come all, as we romp through the leaves from the trees as they fall.

With a scant seven weeks remaining in 2005, psychology will remain the chief determinant of the year-end action. While the tangible metrics offer cause for paws-the aggregate fundies are sluggish, the technicals are mixed (N's over S's) and structural headwinds remain-perception will dictate our collective reality as we climb the stairs of musical chairs. If we factor in the unforeseen expiration crosscurrents swirling under the surface, the need for a disciplined approach becomes increasingly clear.

While my odds for a year-end rally upticked in October, I'm playing my cards a tad closer to my vest of late. There is a fine line between respecting the price action and deferring to it and I'm trying to walk that tightrope. I laid out some defined risk shorts in select financials last week against some tertiary ketchup plays (read: laggards). The piggies have since sloshed sideways but I'm conscious that this is considered healthy action in an overbought condition. And while I've got December paper, my view is that Boo has a shrinking window to convince the Minx that he's got some mojo left.

To be sure, when chewing through the Matador checklist, the eyes have it. Tech and financials are leading, we're in a seasonally strong period, credit spreads are stable and performance anxiety has the potential to manifest. However, with many of our mainstay stochastics twisting along the top of the page (short-term extended)-coupled with what promises to be a spate of technical supply near S&P 1250-the plot thickens for the active Minyans in our midst.

Play seven ways till Sunday, my friends, but play smart and define that near-term risk.

Good luck today.

R.P.

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positions in select financials.
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