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Airport Traffic


If the market is going to rally, why does the German DAX continue to waffle under 3000?


All my bags are packed, I'm ready to go
I'm standing here outside your door
I hate to wake you up to say goodbye
But the dawn is breaking, it's early morn

(John Denver)

Good morning and welcome to flight school. Hoofy's air force is fueled and standing by but Baron Von Boo has (thus far) clipped their wings and prevented a rally. With seven short sessions left in calendar '02, the bovine bombers need to get clearance for take off if they hope to fly the friendly skies. Minyanville air traffic control is open for business so please fasten your seatbelts, place your tray in an upright position and climb aboard.

Yesterday's war rhetoric pushed the fence sitters to the sell side as the prospect of conflict (uncertainty) colored the collective psychology. The action during the last three session is a textbook example of what happens when traders get caught leaning the wrong way. If you recall, Monday's session was dominated by size buyers of QQQ and SMH as players positioned themselves for a breakout. When it failed to materialize, the catalyst for those purchases vanished and the only thing left to hold was the proverbial bag.

As someone who's technically inclined, I like to spend (some of) my free hours wandering through various charts. I suppose that I find solace identifying discernable patterns in this random environment and will always search for a backdrop with which to trade. I'm fascinated by the whole concept of technical analysis and have always wondered if it's a self-fulfilling prophecy. In other words, do traders follow it because it works-or does it work because traders follow it?

I'll save the philosophical discussion for another time but, while I have you, let me share a most interesting observation. I've had this hang-up of late with "head and shoulder patterns" and we've discussed the current levels with regard to "confirmation." The intriguing part, however, is that the dandruff is coming from all horizons. Pull up a one week, one month, three month and five year chart of the S&P. In every instance, the same pattern is unfolding. That, my friends, is just plain weird!

For instance, the 7 year S&P chart offers an interesting perspective with regard to price. We've clearly broken the "neck line" and the "first stop" looks like (are you sitting down?) S&P 600! I schvitz you not! I'm not trying to scare you-although it is a bit frightening-we just need to be conscious that they're "out there." In any event, and on to more pleasant things, Mike Mazzer emerged at 3:57pm yesterday and won the charity auction with a whopping bid of $5500! In addition to scoring a kick ass one-of-a-kind poster, Mike has also secured his place forever in the Minyanville Town Hall! Congratulations, Monsieur're a mensch and you've done Ruby proud!

Good luck today.


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