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Innocent Critters


Reactive traders will continue to key off crude.


Some people stay far away from the door
If there's a chance of it opening up
They hear a voice in the hall outside
And hope that it just passes by

(Billy Joel)

Good morning and welcome back to the two-sided quack. With yesterday's snoozer in the rear-view, December is ready to make its debut. The tape has been quiet, surreal to a point but a new month is here and it won't disappoint. "I've waited in vain for the pain to sustain," said Boo to his crew on the recent campaign, "the bulls are already poppin' champagne but they've yet to feel the insane ursine pain!" Is he sniffin' glue, this young bear from the zoo? Or can he step up and bid Hoofy adieu? The Hump has arrived so get ready to thrill as we unleash the beast for a romp through the 'Ville!

November was a banner month for the bulls as they morphed electoral uncertainty into trend-breaking gains. If Hoofy could have scripted a reward winning movie, it would have entailed a sharp rally into the election, sustained jig beyond it (just to freak out hand sitters) and a sideways slither to collect their breath and work off the overbought condition. We identified this as his "best case scenario" a month ago and to ignore it now would reek of reactive rationalization.

On the flip side of the ride, let's remember from where we came. The four-letter follies is up an impressive 21% since August after the techs trekked past the Minyans in the Mountains. That, combined with the incessant zest of the small caps and a pervasive fear of missing, has edged the psychology scale to a tipping point. And while the Matador crowd smugly suggests that they "can't get 'em down," the lack of sustained supply has every critter in the city ready to buy the dip.

Many of my sector stochastics continue to redline although we're acutely aware that they're not the snazziest of timers. Still, with the '04 S&P high (1188) and two layers of NDX resistance (trendline and '04 high) within spittin' distance, the Red Dye contingent has a place to hang their hat. The likelihood is that a continued sideways slither is more bullish than bearish (further alleviates the toppy slop) so if Boo and Stella are gonna get their groove on, they may wanna cut the rug before the bulls hit the holiday punch bowl.

We power up this Hump Day pup to find a one percent sushi burp, Europe firm across the board and the metal/dollar duopoly flat and flatter. Novellus (NVLS:NASD) and Microchip (MCHP:NASD) will square off in the battle of the chips as the former wasn't as bad as feared and the latter puked while you were sleeping. SOX 420 remains near-term support while SOX 438ish (200-day moving average) rests above. Citi (C:NYSE), the brokers, small caps, breadth, cyclicals and retail remain tells on the periphery.

On an aside, I must say that I'm surprised at how fast this year has passed. As the critters plan the Minyanville holiday fete and vacation destinations come into focus, it "all of a sudden" hit me that we're getting ready to wipe the slate clean and start the process again. We work in an ambitious business and one that requires us to constantly reset our benchmarks and goals. In the race for achievement, it's all too easy to forget that the purpose of the journey is the journey itself. Mea culpa--to a degree--although "seeing" it is the first step towards living it.

Good luck today.


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