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State of the Union


Self-confidence is the first step towards profitability.


Don't you know that you are a shooting star
Don't you know, don't you know
Don't you know that you are a shooting star
And all the world will love you just as long

(Bad Company)

Give it to me straight Doc, whataya think? That seems to be the question on the lips of the critters as we wander through the midday muck. With the stars seemingly aligned for the bountiful bovine, I asked our two hero characters to step into my office for a little oral examination. It went a bit like this:

Hoofy: So lemme get this straight on the non-confirmation thesis, Boo--you're saying that it woulda been healthier for the tape if the S&P went down more? The Nazz corrected six percent--a welcome pause in the big picture sprint. Wake up and smell the roses!

Boo: I'm not gonna lie--I see the breadth (almost 3:1 positive), brokers (now through the January [and all-time] highs) and the momentum in general. Still, you've gotta respect the risk even if you're a monkey (see no evil, hear no evil, speak no evil). Remember, we've yet to clear S&P resistance and until proven otherwise, it's still in play.

Hoofy: Why can't you just admit that we're in a new bull market? Everyone makes mistakes, bro, but don't exacerbate it by standing on your soap box screaming that the end is near.

Boo: You're getting pretty bold considering today's rally has simply brought us back to Friday's opening levels. And say what you will, say what you might--I'm not budging from my stance. Emotions exacerbate trends but the market seldom rewards the majority in the long term. Everyone is bullish, my friend, and bull markets rarely perpetuate when that's the case.

Hoofy: You've been saying that for months...and hundreds of S&P points.

Boo: Yeah, and Elmer responded with an equity enema that would make a doctor blush. Perhaps they can keep the turkey trotting for a while but the wishbone (dollar/gold vs. equities) is gonna snap. The speculative excess is bubbly...they've just changed the names to collect the innocent.

Hoofy: You can't TRADE the big picture, dude, you've gotta invest in it. Likewise, if you're an investor, you can't focus on every single tick. Define your horizon in terms of both time and price before you risk your hard earned money. Otherwise, you're just rolling the dice and the casino has more staying power.

I studied the two critters and noticed that they were polar opposites. Hoofy was dressed to the nines and beaming with confidence. Boo, on the other hand, was tattered and full of doubt. The contrast was stark and reminiscent of last February when Hoofy couldn't get up with a Viagra. I am fairly certain that neither of them remembered how they felt at the time.

I reminded our metaphorical pals to stay disciplined and respect today's opposing forces. Markets that are up all day (with good breadth) tend to end that way, we know, and resistance is in place until proven otherwise. That's the hand we've been dealt and the Minx is shuffling the deck. Bet smart and trade within your means, Minyans, the week has only yet begun.

As always, I hope this finds you well.
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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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