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The Tea Leave Reprieve

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Sushi anyone?

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Good morning and welcome to the bumpy hump. Yesterday's snooze ignited the fuse of the two separate camps with opposite views. While Hoofy's grand plan continues to fan, the bears have been eyeing the chart of Japan. It's an uncanny path (if you do the math) but if it holds true, we'll all take a bath. Will the harsh Jinxy form lead to a storm or is bubble gum fun the new trading norm? It's a new day of play in the ol' minxy fray so settle in folks and join the soiree!

While comparisons with the post-bubble Jinx is admittedly a stretch, a chart of the '90's Nikkei provides an uncanny resemblance to our current path. Yes, the structural differences are vast and past performance is no guarantee of future results--but if you used it as a roadmap, you've been reading tomorrow's Journal today. Goofy? Take a look for yourself and tell me if there's a certain sense of vuja de. That's right, it's the feeling that something that hasn't happened yet has happened before.

To be sure, nothing can be ruled out in an emotional market--including a 1999 type blast-off. Performance anxiety is running wild, the GDP is booming (as it did in Japan), corporate spreads continue to tighten, the charts are feeling groovy and there is an upside agenda like no other time in financial history. With Elmer and Dubya pulling the strings, the ursine have been on the wrong side of the minxy marionette.

The bulls know quite well that Boo is on the ropes and they're looking to put our fluffy friend out of his misery. Every dip this year has been greeted with a rip and the bears have, for the most part, stopped trying. Has fear become a stubborn and desperate attempt at rationality or is there a legitimate reason for concern? There's no doubt in my mind that, years from now, we'll look at housing, debt, derivatives and psychology with a knowing sense of familiarity. Our task at hand, from a trading perspective, is figuring out how long Hoofy can continue to juggle the chainsaws.

There's a few different theories floating around regarding the importance of the next few sessions and I wanted to make sure you're up to speed. Jinxy comparisons aside, our own Scotty Reamer has compiled various timing and price indicators that will soon converge like a lunar eclipse over Minyanville. I don't typically follow the mathematical equations he employs but, according to his work, we should know pretty soon if the Burned Razor has life. For what it's worth, I have also read a Ned Davis Research piece (out yesterday) and his "best guess" is a decline from "around this Friday" until turkey time, followed by a tradtional year-end rally in Decemeber. Now that, my friends, is deja vu.

While there's a part of me that cringes at the notion of a "top" becoming conventional (if not less unconventional) wisdom, the conditional elements of such a dynamic are still in play. Yes, yes, yes...they've been in play for the last few months of upside oompha but that doesn't mean they've gone away. It just means they've got less credibility among the trading set. That, too, could prove to be telling.

I don't "know" if Boo will squeeze in a dance (pun intended) before the 2003 nightclub closes but I've set myself up with a fair amount of gamma (such that I will prosper if he does but protect myself if he misses last call) . I've gathered puts in the uber-extended names (mostly tech and cyclicals) and cheapie calls in oversold (and out of favor) groups (energy and pharma among them). The portfolio isn't that cut and dry (special situations always trump pure market plays) but you get the idea of what I'm thinking.

I want to allow for some wiggle and jiggle (if we test the upper boundary of the range), leave ample room for Sir Chambo tonight and, as always, remain openminded to augment my risk profile intraday. One thing for certain, there's gonna be a whole lotta shaking going on these next few sessions. Stay tight and think positive--we'll get there.

Good luck today.

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