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Monday Morning Quarterback


Personally, I woulda let Justin have it!


Good morning and welcome back to swarming seas. Last week's dip was nary a blip on the radar of the bovine ship. While the ursine crew was overdue, their best laid plans let down sir Boo. "As I power up this boat," the bear said (then he cleared his throat) "we'll see if Hoofs the bull can float before we cast our trading vote!" Can the pirates really pull some rank and make the bovine walk the plank? Or is this just another prank that spanks the bears and breaks the bank? It's a brand new week of choppy tide so strap in, Minyans, for the ride!

After a torrid pace to start the '04 race, January ended with hope suspended. While the pause in the upside cause was well deserved and much needed (after the mid-December sprint), the hairless bears are saying prayers. It's hard to blame them, I suppose, as every microdip the past eleven months has been a quick precursor to a Snapper reverser. Is this yet another example of Hoofy catching his breadth before catching the shorts? Maybe, but sooner or later, Elmer's asthma is sure to wheeze and usher in mad bull disease.

The cutesy aspect of the current juncture is deciding whether subtle wording by the Fed is, in and of itself, cause for correction. We know that the (extended) field position and technical resistance played a paw in the thaw but that was then and this is now. We've got two monster catalysts this week--the Cisco disco tomorrow (CSCO:NASD) and employment data on Friday--and the posturing (and reaction) to them will go a long way in identifying the all-important psychology metric.

As for Chambo, he's typically an upbeat and 'glass half full' type of guy. He assured us throughout the entire tech melt that they were "well positioned for the inevitable upturn" and perhaps he'll be proven correct. With Juniper's (JNPR:NASD) blast off three week's ago (on earnings), expectations are for a frosty mug filled to the brim. He'll likely be in a pretty good mood, as always, but there's no denying that the stock has discounted a certain amount of optimism. How much so, and how much there is left, will color the collective psyche.

On the jobs front, the mind games are already in full gear. This is the last bastion of tangible hope for the bears as they'll argue that Elmer can print money but he can't manufacture employment. Further, if the last jobs number was underwhelming on the heels of an 8.2% GDP, how good can they be with a 4% GDP? Hoofy, for his part, is resolved to the fact that this is a lagging indicator and it's only a matter of time before it gains traction. He's also harboring hope that Elmer saw this crop report before he dropped his infamous "considerable period" omission.

In tape talk, the rolling rotation continues as the semis (down 8% in the last three weeks) have been the source of funds. The chip dip warrants attention as they're the single most important tech sector and the SOX is sitting on both a trendline (from August) and the 50-day moving average. The (in)ability to hold these levels will offer clues to the puzzle as we trade ahead.

Finally, we've spoken in recent weeks about volatility in the other asset classes and the inevitability of its eventual seepage into stocks. That came to fruition last week as the VIX popped 12% and its four-letter version (VXN) tacked on 18%. As some of you (us) know, volatility trends tend to last longer than most expect so pay attention to these measures both from a tactical trading standpoint and as a measure of fear in the marketplace.

We power up to find a flattish world and new world champs. Congrats to Dan Meehan and the New England Patriots on their thorny crown. The Cats scratched and clawed (and covered the spread) but, in the end, Adam Vinatieri isn't gonna miss three boots in one game. All in all, one of the better Bowls (after a slow start) and the stronger team took home the trophy.

Good luck today.
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