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The Great Debate


No European follow through to yesterday's jig?


Hello and welcome to KCMV Radio, home of the fighting Minyans. This morning's debate, broadcast live from the University of Minyanville campus auditorium, is brought to you by Fugly Fur Shampoo. If you're gonna scrub the rug, you might as well scrub it Fugly! For the green team, representing the bovine beasts, will be academic all-American Hoofy. In the red spread, from parts unknown, the beaten down Boo will share his spew. Thank you both for coming and let's please begin.

Moderator: The Minx is dancing higher as Elmer is set to begin his second day of congressional grilling. What is your current interpretation?

Hoofy: It's pretty one sided from where I'm standing. Big deals are getting done, the Fed has painted a Goldilocks scenario, internals are strong, there's no sell-side motivation, leadership is evident and enough skepticism remains to climb the wall of disbelief. There's nothing to interpret--the bulls have the ball and until they fumble, the bears will stay on defense.

Boo: That's one way to look at it. Another way would be that everyone is loaded to the gills expecting this massive breakout. If it doesn't catch, you're gonna have a truckload of trapped bulls and a textbook double top (S&P). And I will debate you till I'm Boo in the face regarding the skepticism. Not only are investors complacent, they're historically complacent! And what's up with the non-confirmation in the transports and NASDAQ? Those are negative divergences, boss, and they shouldn't be ignored.

Moderator: The equity crowd is pretty focused on their meat and potatoes. What's the dilio with currencies and commodities right now?

Hoofy: A rising tide lifts all asset classes and the world, flush with freshly minted cash, is putting it to work. The fact that commodities, equities and bonds are all rallying isn't cause for concern, it's indicative of a liquid environment! At the end of the day, the world is one big balance beam and when demand exceeds supply, the equilibrium must be recalibrated.

Boo: I notice that you didn't include the dollar in your rose colored synopsis. While price is the ultimate arbiter, I view the current landscape as one giant wishbone (which I suppose is apt). The dollar/gold duopoly will eventually diverge from equities and I'm willing to bet that when the dust settles, stock investors will find that they really haven't gotten a lot for their money (on an absolute or relative basis).

Moderator: Let's circle back to the M&A activity. What's your relative take?

Hoofy: Again, I don't think this is debatable. Deals are getting done, people are getting paid and the inflows are digesting the new issues and secondaries nicely. Frankly, I'm surprised that there haven't been more European takeovers of stateside assets with the Euro as strong as it is!

Boo: Does anybody remember the US Robotix/3COM merger? Time Warner/AOL? My point is that big deals aren't always big deals. Sometimes, it's actually indicative of froth as companies rush to use their stock as inflated currency. Yes, the conventional spin is bullish but there ARE two sides to that debate.

Moderator: How are you two approaching today's tape?

Hoofy: It's game on from where I stand and unless S&P 1150 is taken out (on the downside), I'm gonna continue to play from the long side. That'll be the first sign that this is a Snapper trapper (false breakout) so that's where my risk is defined.

Boo: I'm fading (read: selling) this market with an S&P 1165 stop (on the upside). That's my risk definition and as long as I'm disciplined, I can play seven ways 'till Sunday. The bulls seem particularly agitated with ursine fodder these days but that's alright. Trading isn't a popularity contest, it's a profitability contest.

With that, the buzzer sounded, the early morning debate came to an end and the young critters shuffled towards the exit. You could almost hear the energy in the room as the student body, decked out in sweatshirts and baseball caps, chatted among themselves. It was a beautiful day on the UMV campus and great things were starting to happen. The leaders of tomorrow couldn't wait.

Good luck today.
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Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

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