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Tickle Me Tuesday!

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After Friday's profit taking and a most peaceful weekend, I sensed I'd be first in the critter line this morning.

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Good Morning and welcome back to the critter pack. Last week's valley on either side of the rally ended with Friday's slight downside finale. "Despite the quick blip from both Elmer and Mickey," Sammy said of the tape (that has been rather tricky), "the upside tea leaves haven't been very sticky as traders sold news (they've gotten real picky)." Will the three day respite spur the bulls to commit or are Boo's skinny buddies now rested and fit? It's a spankin' new day in the Minyanville fray so let's comb the hair of this minxy toupee!

We fire up today's engines to find the trading community emboldened by a spate of deals and eyeing the other side of the hump. Have the bulls, after three days of peaceful sleeping, stored enough energy to poke through stubborn resistance? Hoofy would like to believe so and, after fielding similar questions for the better part of the past year, he believes he's earned the benefit of the doubt. "If you continually look for the cracks in the sidewalk," he deadpans, "you'll miss the beautiful landscape that surrounds us daily."

Be that as it may, the market is ever-changing and this particular juncture is shaping up to be mission critical. Not only are we tetherballing a rather important technical area (S&P 1150-1160 is a 50% retracement of the entire bear move), the internal dynamic is starting to raise eyebrows in the ursine camp. "Classic non-confirmation from the techs and transports," Boo points out, "as the S&P made a new high and these supportive sectors didn't come close." To add spice to the mix, the NDX is sitting directly on its 50-day moving average and the semis are seemingly sauntering through a prolonged head and shoulders.

While equities certainly don't have a monopoly on the price action--gold is probing upside resistance as the dollar meanders through multi-year lows--we've learned through experience that the stock market is the world's largest thermometer. Everything's funny when you're making money, as the saying goes, and people tend to get ornery when their pockets thin. That has widespread implications during an election year, particularly when it coincides with (perhaps) the biggest psychological bubble in history.

As we edge forward through 2004, investor interest will likely focus on the two political fronts: the economy and the war. While the bulls have shifted their focus on the former from "it's a lagging indicator" to "it's a function of productivity," the bottom line is that folks aren't getting jobs. That may or may not matter--time will tell--but perception is reality and that perception will be shaped by the performance of equities (and vice versa). With regard to the war (and events leading up to it), there are global, financial and personal ramifications (both ways). Whenever something is that impactful, we must monitor it for outliers vs. conventional wisdom.

First things first, we've got a full plate in front of us to start the week. We saw some profit taking ahead of the three day weekend and the early morning futes are recapturing some of that flag. I would expect a downside tickle near the opening before the trend du jour finds its way. In that regard, watch the breadth (nastola on Friday), the semis (SOX 514 is the 50-day), financials (have traded dry) and the biotechs for daily reads. On the macro scene, the dollar is breaching multiyear lows, gold is trying to use past resistance ($410) as new support and Europe is marginally green and awaiting our open.

Finally, in Minyanville news, the much anticipated massive community overhaul will be unveiled on Monday. This will allow the critters to provide uninterrupted market commentary through Friday before drawing the curtains for the weekend. It will also allow two full days for the paint to dry on the renovation and enhancements--including Buzz & Banter, UMV, the elementary school, Minyanwood and more! Thanks for your continued support (and patience) as we edge ever-closer to our dream.

Good luck today.
position in qqq

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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