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The Box Trot

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If yesterday was a "step back," I better get a fresh set of Nikes.

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Walk out of any doorway
Feel your way, feel your way like the day before
Maybe you'll find direction
Around some corner where it's been waiting to meet you

(Grateful Dead)


Good morning and welcome back to the ticks that tack. A session of rest arrived yesterday as the Minx slithered by and most critters strayed. When the dust settled down and thy closing bell tolled, the script had been written with a story untold. "I think that my team held the line pretty well," said Hoofy the bull as he took a quick smell, "most traders I talk with don't wanna sell as they wanna be there for the end-of-year swell." Can the clan keep it up and run with this pup or will they be holding a half-empty cup? A new day is here so you better make way as we take a quick sniff of the minxy bouquet!

The Monday snooze was welcome news after the nutty strut up young Boo's butt. From the bovine perspective, it allowed the crowd to catch their breath before a fresh assault on technical resistance. Over in Red Dye, the ursine crew was thankful that they didn't have to break out into another chorus of Moon River. All in all, it was a push although given the context of the field position, it was a welcome evolvement for the Matador Crowd.

Traders will likely use today's session to posture themselves in front of the Cisco kid (CSCO:NASD) and tomorrow's FOMC. Global markets were mixed overnight as Europe shook off some sobering news from Infineon (IFX:NYSE) and sluggish German confidence. The path of least resistance remains to the upside although we must recognize that the S&P and NDX are both flirting with areas of contention. And as is usually the case after a smart upside move, the short base has dwindled and that adds an element of downside risk to the equation.

The prevailing wisdom is that any pullback would be corrective and as long as our primary subsectors hold former resistance, the bulls will continue to subscribe to that view. Levels to watch in that regard include BKX 100, XBD 130, SOX 415, Russell 595 and S&P 1140ish. How you approach this juncture is a function of your individual methodology although it's become increasingly clear that the masses are positioning themselves for an end-of-year sprint (chatter was loud yesterday that the combination of the Microsoft (MSFT:NASD) distribution and conventional money flows would buoy the tape). Conventional wisdom "works" in momentum driven environments but also paves the way for an unexpected path of maximum frustration. Please see both sides.

Good luck today.


R.P.

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