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Morning Muse


Check out the Visa article in the C-section of the journal. Talk about debt hot potato!


Good morning and welcome to the flighty sight. Yesterday's Snapper was certainly dapper and Cisco's good news was the ultimate wrapper. With Chambo's strong showing and Hoofy now crowing, are we gonna see some more towel throwing? Or is this the good news that's meant to confuse and set the tape up for a black and blue bruise? It's a brand new session of critter obsession so settle on in and let's make an impression!

Throughout Thursday's fray (as we found our way) the tape never felt like it would give way. I suppose that shouldn't be a shock as, well, even the bearish scenarios called for a higher spike (first). The question now becomes whether this is the necessary good news (that precedes a top) or yet another in a string of encouraging inputs. As freaky as it sounds, that verdict has yet to be rendered.

What's the bullish scenario? A lack of motivated sellers, for one, as a discernable catalyst has yet to emerge. With 2004 a scant chant away, performance anxiety has permeated the mindset. Add to the mix a manic panic and some snazzy reverse dandruff (S&P/NDX) and, well, the "edge" for the bears is sharp as a marble. The news may be best at a top, they'll concede, but who's to say the news (or the top) is at its best levels?

The bears will argue (to anyone who will listen) that the dip shtick is getting old. The writing on the wall (insider selling, overt complacency, unrealistic earnings, sneaky rate hikes around the globe) is American graffiti at its finest. Elmer's zoo set out to reinflate the economy and they've accomplished their mission. Much like you can't cure alcoholism with a bottle of whiskey, however, the answer to a debt bubble isn't to encourage more debt. Last call is ringing loudly, they argue, but the patrons are too drunk to notice.

Cisco (CSCO:NASD) giddy upped the pup last night by reporting better than expected earnings. It's certainly hard to argue with that chart (particularly in this environment) but there was a sense of familiarity when listening to the call. Sir Chambo, citing the "inevitable upturn," offered limited visibility (quarter to quarter) and, in what has become my favorite "show me" line, said that "as our customer business improves, ours will too." No schvitz, Sherlock, if my customer business gets better, I'll likely see an uptick too!

All kidding aside (no joking!), it was a solid quarter and the immediate gratification types are licking their chops. As the bubble offered an unrealistic basis of comparison, however, we've gotta be careful with our relative expectations. In other words, the new generation of investors have been conditioned to believe that because Cisco was an $80 stock, it's a downright steal in the 20's. Do the math and juxtapose the valuation against the historical mean of price to earnings. Just because we were asleep in a bubble doesn't mean all of our equity dreams will come true.

Onward and upward, and no mushing intended, Scotto Reamer's excellent piece yesterday seems to be getting some press. I mean, heck, when Tom DeMark calls to personally discuss it, you know it's 'out there.' Truth be told, the aligning stars (and the accuracy of the S&P 1044 first leg) is tempting fate but it warrants attention until proven wrong. While it certainly feels as if the tape has nowhere to go but up, we must remember that the toughest fades are typically the most rewarding.

We power up the spaceship to find a hammered Jinx (-2.6%), a (marginally) firm Europe and traders scratchin' their noggin. It's certainly too early to pen an equity epitaph (particularly in front of Beek's 15 minutes tomorrow), but we'll need to pay particular attention to how stocks react to good news. They shrugged and hugged on the way up, it remains to see if they're gonna get plugged and mugged on the way down.

Good luck today.

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