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Where Wolf?

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Watch the banks as they battle BKX 950.

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The wolf came in, I got my cards
We sat down for a game
I cut my deck to the Queen of Spades
but the cards were all the same


(Grateful Dead)


The morning dew begins anew as traders search for hints of Boo. The early test brought daddy's nemesis (S&P 1050) back into sight but, as it stands, the opening gap (from yesterday's yap) held. I know Hoofy...shocker!...but stop yawning long enough for us to take a quick walk 'round town.

The question on all our minds is whether S&P 1060ish will prove to be a turning point. The bulls will point out that this current phase is exhibiting all the characteristics they're looking for (leadership, internals) and, even if there's a pause, they're quite willing to buy dips. With all the comparisons between now and 1999, why would they not?

The bears, despite the insistence that we've cleared all technical hurdles, maintain that layers remain "in and around" S&P 1060. Further, they opine, there is a universal belief that equities are going higher and bonds are heading south. While that may prove to be true, they know that a lopsided vessel is more likely to capsize.

Is the Burned Razor still a possibility? It is, but time (and price) are starting to run out. With Cisco (CSCO:NASD) reporting tomorrow and important economic data due later this week, the writing will be on the proverbial wall of worry. My strategy? I own a bevy of downside puts and continue to hedge that exposure with (dollar kind) front month calls. The gamma game has been a drippy drain but in this type of environment, I prefer that stylistic approach.

As always, I hope this finds you well.
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