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Jack's Straw

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Stuffed?

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Ain't no place a man can hide, Shannon
Keep him from the sun
Ain't no bed will give us rest, man,
You keep us on the run


(Grateful Dead)


Good morning and welcome back to the skeletal shack. With most traders stuffed like a turkey today, the true diehard crew will step up to play. The tape will be thinner than most of us feel but how can it not after last night's big meal? "It'll make for a whippy session for sure," said Daisy the cow in a manner demure, "and Hoofy is feeling pretty secure that the recent upside is gonna endure." Will traders sniff at the bovine aroma or will the ursine put them into a food coma? It's freaky, it's Friday, it's sure to fulfill so take a deep breath and walk through the Ville!

This morning's reverse hooky will be brief but I wanted to chime in with some quick thoughts. With the tape seemingly acne bound and the increased potential for volatility, the typically boring holiday snoring may be anything but. The Matador Crowd has been quietly smiling during the last few weeks as the ursine uglies tossed straws on the camel. They know that overbought conditions are worked off as a function of time or price and that the only way they could romp to year end is if they caught their breath.

Caveats surely apply as eye-popping complacency and macro pressure points are a potentially toxic combination. But the bulls clearly have the benefit of the doubt and confidence often manifests in thin tapes. Toss in some performance anxiety and a perceived catalyst (Microsoft (MSFT:NASD) and, well, it's first and goal for the green team. The bears have been known to pick off some passes but they're clearly operating in a prevent defense.

Levels to watch include NDX 1580ish (former resistance and future support) and S&P 1188ish. The beauty of inflection points is that they offer definable levels to structure trades. The problem with obvious set-ups is that they're crowded and the hedge fund hot potato will be active. Reading the trading tells will surely help, and in that vein I would eye the breadth, leadership (financials, semis, cyclicals, trannies) and crude. The dollar remains on the radar as a macro variable but may only "matter" if fixed income follows suit.

I'm out today and will leave the 'Ville in the capable hands of a few brave professors. The full crew will return on Monday and gear up for the final run to the '05 gun. Be careful with your risk and try and remove emotion from the decision making process. Reading sentiment and getting caught up in it are two different propositions so police yourself accordingly. It takes a lot of effort to make money and a simple lack of judgment to give it all back. Think positive, trade to win and, above all else, be yourself sir. No matter what happens, they can't take that away from you!

Good luck today.

R.P.
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