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Using the right lane


Wow, only two more days to go until Christmas - man, what a year! Ho-Ho-DOH!

Each day as I drive over the GWB coming to work, I focus on what I want to say in my morning commentary. I was struggling today because I could come up with some great data points to make an argument in either direction. Since I am tired of arguing with myself (Evil Tony vs. Good Tony), I decided to clear my mind and focus on the first thought that reentered my mind and this was it:

I was irritated because it is a holiday week and traffic on the upper level was particularly heavy at a time when it normally isn't too bad (6:15am). As you approach the toll booths on the upper level, there is a right lane that is separate from the other lanes and normally allows you to save a little time by beating about 10 cars (what makes you think I am "type A?"). It was empty and no one was going there. My irritation turned to curiosity as I went right and down the empty lane. Why didn't anyone else do the same? Was I doing something wrong that I could get in trouble for? Doesn't anyone else want to save a little time?

I went right, saved some time, hit less traffic and satisfied my curiosity. It would have been more comfy to stay in line and follow everyone else, but heck - what fun would that be?

The markets came into focus because all too often the herd moves one way and it becomes very uncomfortable to take a different view. A little over three weeks ago, it was very uncomfortable, as someone with a technical bent, to ignore the breakouts on volume that had taken place with many stocks and the NASDAQ Composite Index (NAZ) itself. The herd was clearly saying that momentum was with the market and traders (or investors) don't need to fight it because the bottom was in place and the year-end rally was firmly entrenched and moving forward. While it is always difficult to be early because it is human nature to question your view when wrong, it is better than being late. Moving away from the herd at that time made some sense.

Today, the opposite could be true. The herd believes that the market is technically weak, that the geo-political environment is a negative and the pre-announcement season could further weigh on stocks. Much like when things were looking great three weeks ago, the herd's argument makes a lot of sense. So why then would anyone want to fight it and "go into the right lane," especially with the year nearly over?

The answer is because so many are thinking along those lines and has likely positioned their portfolios that way - meaning being out of the way. That taps the sellers and opens the door for a snapback rally on anything that might even be a hint of better than expected news, especially given the near-term oversold condition of the tape and the correction that has already taken place.
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Seems like folks are feeling a little ornary right now.
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