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Crunch Time for Critters


Hey Boo--even a broken clock is right twice a day!


Good morning and welcome to Freaky Friday. Monsieur Boo notched another victory yesterday as the bears pounced on a wounded Hoofy and backed him into a corner. Now, with the S&P and NDX both sitting on monster support, it's put up or shut up time for our bodacious bovine. One would think that these zones will hold the first go 'round (especially with the market down four sessions in a row)-but if this Minx has taught us anything, it's to expect the unexpected. Kick off your galoshes and peel off that sweater, cookiepuss, it's time to talk tape.

With a couple of weeks left in this rather long year, traders have one eye on the price action and the other on the calendar. The performance anxiety vacuum has sucked a lot of "hope" into the market and the relentless traction (that the tape has exhibited since October) has conditioned both the longs and shorts to use weakness as a buying opportunity. With the countdown to '03 getting louder each day, one of two things is going to happen in the next couple of weeks. Either the bulls will step up and deliver a holiday gift to investors or the bears will (once again) stuff the stockings and steal the thunder. Welcome to Minxville, baby, circa 2002.

One of the reasons I've been skeptical of the year-end rally is that I thought back-to-back December rippage is a bit cute. Portfolio managers who puked into last year's September abyss are lugging exposure because they fear missing the upside. That, my friends, has been a dangerous proposition in this environment as "selling hope" has been the money trade. Can this time be different? Absofrigginlutely...whenever I get too bearish I pull up a five year chart of the market and remind myself that the short side is no longer a novel concept. Still, I've little doubt that further downside is a matter of "when," not "if," and my biggest concern remains one of timing.

We power up our systems this morning juggling the Intel news with one hand and the IBM downgrade (Solly) with the other. To complete this morning's gigglefest, Beeks will be swinging by at 8:30am and deliver the Unemployment rate (exp. 5.8%), the change in Non-critter payrolls (exp. 36k) and the change in Manufacturing Payrolls (-28k). The Average Weekly Hours will also be released and expectations are for 34.2-although that number seems extremely low to me!

In nine short hours we'll be focusing our attention on the requisite two day respite and a weekend full of football and friends. Before we do, however, we'll need to sharpen our senses and clear out the cobwebs-this is an important day for the market. Boo's looking to make it clean sweep this week while Hoofy knows he must defend these levels for the year-end rally thesis to remain in tact. It seems like every down is 4th and 10 in this tape but if we're to stay in the game, we got to play be her rules.

Good luck today.


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