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The Masquerade Ball

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Don't get caught up staring at any one stock.

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Then she says she wants forgiveness
It's such a clever masquerade
She's so good with her stiletto
You don't even see the blade


(Billy Joel)


Good morning and welcome back to the Hump Day track. There's a lot going on and so much to do as we get set to hang with Hoofy and Boo. The critters will have their hands full as they digest the earnings avalanche, Dubya's details and the new sheriff in town (named Boom Boom Bernanke). Yes, there's a little something for everyone as we roll up our sleeves and double down on the Jo so, without further adieu, let's dive on in.

The obvious headliner today is Google (GOOG) as the speculative proxy got dinged for as much as 70 points overnight. While this has obvious ramifications for the collective psychology (read: keep an eye on inevitable Snapper attempts), one stock does not a market make. In that vein, I will offer that the financials are again a focus as Hoofy tries to limit the peripheral damage and mount an "S's over N's" style comeback.

With the bevy of earnings (chewed through on today's Buzz), there will be plenty of options for portfolio managers to choose from. If they can, in fact, stem the tide or (GASP!) find their rally caps, the "can't get 'em down" crowd will grow increasingly loud. Obvious tells in that regard include market breadth (single best intraday tell), the financials (and other rate sensitive issues), cyclicals (Boeing) and our still stubborn technical support (S&P 1275, NDX 1705). Remember, Minyans, bottoms are "points" while tops are processes and IF (big if) Boo is gonna snag back the baton, he'll have to show these bulls of will what will really is.

I'm gonna skip the trip down "metals and energy" lane as we've talked of it quite often this week. Suffice to say that I've scaled out of (most of) my exposure in those complexes despite long-term belief in both. A Minyan pinged me yesterday and suggested that we amend our 10th Commandment to "the definition of an investment should never be a trade gone awry but you can let your investments turn into trades." Interesting thought although, given the fact that I feel both sectors are still under-owned in the fund community (vs. tech and financials), I admittedly feel a tad naked as we ready for the Hump.

Finally, our fearless leader took the stage last night and offered a modest menu of energy, health and education proposals. That's (almost) funny as those are the same elements that continue to flex inflationary muscles despite repeated assurances of benign prices. While I agree with his assessment that America is addicted to oil, we're also addicted to debt and that's the bigger elephant in the room. With all the focus (or lack thereof) on the hurricanes, lobbying abuses, Iran, Iraq, Supreme Court nominees and wire taps, we continue to consume beyond our means on every level and dig an ever-expanding fiscal ditch. We can run but if we don't pay our bar tab, it's our kids who will have to hide.

Good luck today. reported.

R.P.
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