By Todd Harrison Nov 03, 2004 8:50 am
Ain't gonna be no rematch!
Tin soldiers and Nixon coming,
We're finally on our own.
This summer I hear the drumming,
Four dead in Ohio.
Good morning and welcome back to the clarity pack. It's not over yet, say the boys on the hill, but Kerry is eyeing a most bitter pill. While nabbing the beaches on both major coasts, he's coming up short where it may matter most. "The odds say we'll soon have a W2," said Sammy the Snake while talking to Boo, "that's why they're bidding the futures anew despite a tight fight that's under review." Will this be the pop that leads to a top or have we just seen the feeble bear flop? It's Hump Day, my friends, so shake off those jitters and let's take a stroll in the city of critters.
The ducks were lining up in Matador City yesterday with the assumption that at least one of them would be lame. We prodded, poked and pushed at S&P 1140 all session before a confluence of factors led to the late trap door. We power up the minxy pup to find the futes right back where they were, enthused by the prospect of clarity and supported by the power of assumption. After all, contested elections are old hat for Dubya and even the die hard Dems are starting to toss some towels.
Assuming this plays out as most believe it will--which has a high probability but is not guaranteed--investors will eventually turn their attention back to traditional metrics and year-end follies. We know that S&P 1140 is 'a' level and further congestion is layered up to the '04 highs (1165). That should provide a stern test for the bulls and force them to show the bears of will what will really is. Remember, before yesterday's sudden poop, everyone and their cat was set-up for the clarity rally. How much of that inventory 'grows' on the buy side vs. how much is held for sale will dictate the magnitude and direction of the next tradable leg.
Absent news, back-to-back "pop and drops" may be a tall order for Boo. Still, with the psychology metric (performance anxiety) playing such an important role, certain intangibles exist on both sides of the equation. The "long squeeze" dictates that buyers are higher as the only thing worse than absolute loss, in the eyes of portfolio managers, is relative underperformance. As long as that pyramid holds true, the bulls will benefit. If the buy side interest dries or unanticipated news hits, however, we'll likely see a bottleneck that would put yesterday's move to shame.
Expect sector rotation today as investors jockey into perceived beneficiaries of an incumbent victory. Jeff Saut of Raymond James, who is a gifted sage and better friend, opined on Monday that a Bush whoosh would be good for the HMOs/pharma/pharma benefit companies, energy, defense, asset managers and property/casualty insurers and those sectors should remain on the radar. And, as we must also monitor the broader landscape for clues nestled in the muck, the financials, semiconductors, breadth, crude and Phoebe warrant a mention.
It promises to be a nutty session (and most of us are working on limited sleep) so put that game face on and trade to win. I would expect a fade attempt at a point but I'm uncertain, as of now, what type of meat Boo will find on that bone. One step at a time, my friends, as we find our way through the twisty fray. I've gotta juggle this struggle so lemme hop and I'll catch you over on the Buzz.
Good luck today.
No positions in stocks mentioned.
Get The Minyanville
Daily Recap Newsletter
Daily Recap Newsletter