By Todd Harrison Dec 02, 2003 8:36 am
You can try anything as long as you're disciplined.
Good morning and welcome back to the spawning. After much ado and considerable review, the acne arrived in the Minyanville zoo. The frenzy was there (causing ursine despair) as Hoofy took off on a wing and a prayer. "Don't overthink," he said with a wink, "cause Santa will push the bears to the brink!" Is the breakout so clear that we all should now cheer? Or are things not as rosy as they seem to appear? It's a new trippy session of minxy obsession so harness those vibes and use your discretion!
If we were to assimilate our primary trading metrics, it would likely appear that Hoofy is firing on all cylinders. It's hard to find fault with the charts as the major indices flex and impress. News that the economy is strengthening is dominating the media platforms. The prevalent psychology has created upside momentum unseen since the heady bubble days and Elmer seems intent on furthering his agenda. What's not to like?
My concerns for this market--and, to be honest, our future--are well documented. I could enter into (yet another) diatribe as to why I feel as I do but it's old hat by now. The leverage in the marketplace, maze of derivatives, plight of the dollar, housing bubble, massive complacency, record insider selling, 80% service economy (and lack of underlying goods) isn't going away. In fact, they seem to be feeding on themselves and morphing into one giant mound of trouble. What's not to like? Plenty, in my opinion--but in the never-ending quest for immediate gratification, none of these concerns will matter until they do.
That's little solace for young Boo as he bends over daily and mumbles "thank you sir may I have another?" The repetitive spanking has effectively sapped the spunk from the bearish hunk. Yes, we spoke of the need for the pop before any potential drop and, true to form, the Minx has delivered on her end. The question now becomes how much pop is left and, perhaps more importantly, has the drop ceased to become a probable event?
I will say this--if the news is always best at a top, there's a whole heckuva lotta good news floating around and the convergence of the trading metrics has removed Boo's tangible catalysts. In fact, it's so "apparent" that we're going to rally into year end that we've got to be extra conscious of a potential trap. That doesn't mean you can't hang with Hoofy (or bang with Boo), it simply means that discipline is warranted now more than ever.
Adam wrote a pretty compelling article this morning that I've now read three times. He makes a great point regarding the consistency of conventional wisdom this year and the ability of "everyone" to be right. It did seem too obvious in March (from both a timing and price perspective) but, looking back, too much thought was profit prohibitive. I would humbly make the point, however, that we're in a very different mindset now. Sentiment was the mirror image (lotsa bears) and the crowd was leaning short. That's not to say there aren't naysayers left--there are--but a bearish view is currently being mocked just as the bulls were then.
Minyanville isn't about offering advice, it's about providing perspective--and I'll be the first to admit that my personal perspective has been way too furry this year. Just remember that the greatest trick the devil ever pulled was convincing the world he didn't exist. If everyone was positioned for the downside, it would never come to pass. Ironically, the fact that a new bull market is universally accepted is one of the most bearish elements out there. Ironic? Yes. A timing mechanism? No. Minxy? Absolutely!
We power up this morning to find marginal give back in Europe and our stateside futures. The obvious level on the downside is past resistance (current support) and you can be sure that there's some decent stops below S&P 1060. Up north, the focus continues to be S&P 1075ish. Again, IF (and this is one huge if) there is to be any meaningful downside, the breakout needed to take place first. The next few sessions will be telling as the Minx needs to hold and base above the acne level for further upside to unfold.
Good luck today.
No positions in stocks mentioned.
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