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Tickle Me Tuesday!


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


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.
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