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Animal Farm


Oofa! Europe is getting smoked and if the German DAX doesn't hold 3000, it could get messy!


Good morning and welcome back to the dog pound. Yesterday's session was the very definition of edgeless as traders lobbed stocks back and forth and the tape jockeyed between support and resistance. The mutual fund gorillas were noticeably absent from the mix but make no mistake, they're out there and awaiting a signal from Minximus Maximus. This is a tape where the men are men and the sheep are nervous so pick a side or get out of the way-the wolf has entered Minyanville.

With 13 days short trading sessions remaining in 2002, each passing day is one step closer to resolving the great debate. The bovine will argue that last week's pullback sucked in just enough bears to ignite an upside feeding frenzy. On the other side of the barn, the ursine maintain that the recent slide caught the bovine with their pants down-and if their precious rally doesn't materialize, the sellers will come alive at lower levels.

At any given time, a case can be made for either side of the argument-that's what makes a horse race and creates the supply/demand equilibrium in a free market. I've been steadfast in my view but I also know that nobody can outthink the Minx and we must appreciate the potential for all outcomes. This is an emotional market and we're smack dab in the middle of the weeding out process. That fact isn't lost on portfolio managers who will be measured by their ability to keep up with their peers.

One of the most egregious mistakes when trading is trying to squeeze performance from a stone and I would urge you to spend some time thinking about your relative edge. The goal, as we know, is to maximize your reward relative to your incremental risk and make no mistake-there is sizable risk to both sides of this tape. Bulls and bears make money and pigs get slaughtered so leave the sizzle to Jimmy Dean and let's make some bacon!

Good luck today.


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