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Chilly Cats


Good luck into the close!


Outside in the cold distance
A wildcat did growl
Two riders were approaching
And the wind began to howl

(Bob Dylan)

The afternoon race picks up in pace as the critters ready for the great chase. Will Snapper finally have his moment in the sun? Can Boo screw the zoo with some crimson shampoo? Will Mr. Fokker, executive extraordinaire, finally get some digits with his snazzy new business card? The answers to these questions (and more) will be answered As the Minx Turns. Let's take a walk through the 'Ville.

The Hump Day session is, thus far, a marginal victory for Hoofy as the breadth, brokers, semis, cyclicals and biotechs are all tinted green. We've discussed the technical juncture--both in terms of levels and measures--and those issues remain unresolved. Remember, corrections occur as either a function of time or price. While the techs have given back some of their heady gains, the S&P is biding its time. She's got some (alotta) work to do to rectify the negative divergences and non-confirmations, Ruprecht, but it may not be time for the fork (yet).

While the NDX (and semis) look like broken records, the pattern I'm eyeing is the stealth pennant formation in the BKX. This sector is THE sector to watch as it's an "easy money" proxy, a systematic risk proxy, a credit spread proxy and, oh yeah, it's a sizable chunk of the S&P weighting. Once upon a time, if the chairman of the FOMC chastised the two most important financial institutions in the world, the entire complex (and market) would be down in sympathy. He did, it's not, and I'm wondering if investors are in denial or if the tape really is that strong.

Say what you will about Elmer--and there's plenty to say--but he IS the chairman of the Federal Reserve. When his lambasting of the F-troop is the lead story in the Wall Street Journal ("pose serious risks to the financial system and congress should curb their growth"), that's about as red a flag as you can get. He's been early before (irrational exuberance), wrong before (sanguine in February 2000), and in my view, reckless now (flooding system with liquidity, encouraging debt, squeezing the public back into the market and reflating a bubble). Still, anybody who knows anything about the correlation between leverage and derivatives MUST be concerned. I'm involved in the name (have been for years) and I've contributed my fair share to the Fannie Mae Memorial Put Fund. While I know it's crowded, I also think it's ticking.

Looking ahead to our catalyst calendar, Beeks swings by tomorrow with durable goods (exp. 1.4%, less trans 1.8%), initial jobless claims (exp. 345k), new home sales (exp.1075k) and the help wanted index (exp. 39). We'll also get a spate of earnings before the opening (American Eagle (AEOS:NASD), Calpine (CPN:NYSE), JC Penny (JCP:NYSE), Liz Claiborne (LIZ:NYSE), Limited Brands (LTD:NYSE), Toll Brothers (TOL:NYSE)) and the close (CHINA:NASD), Gap Stores (GPS:NYSE), Kohls (KSS:NYSE), Placer Dome (PDG:NYSE). We'll then get a buncha economic numbers on Friday and then a much needed two day chill and release.

My thoughts here? Tell me your time frame and I'll tell you no lies! A near-term bounce wouldn't shock me (tech down five weeks in a row and the stochastics getting close) but I'm a fader (read: seller) until the pattern of lower highs/lows (NDX) is resolved or the BKX breaks to the upside. Big picture, I'm firmly in Jeremy Grantham's camp (black hole) and genuinely fear for my grandchildren. My mom will tell me to get married first (or at least find a girlfriend) but I DO plan to do that, one day, and when I do...and they have kids...I fear that they'll be paying for today's debt.

In Minyanville news, thank you all for your kind (and sometimes constructive) criticism on the new digs. Yes, we'll figure out a way to link the News & Views columns together. Sure, the site will be lightening quick with the new server. Absolutely, we'll be building our family of content--in fact, if Minyans have any suggestions for potential professors, please pass them along. They'll need a unanimous vote from the tenured team, of course, but we're always up for suggestions!

I'm gonna jump and juggle as we ready for the close and Mr. Fokker's big night. I still can't believe that my little baby is all grown up--and if I have anything to do about it, we're gonna find that bear a little bunny. Before I go, I wanna share a little perspective with ye faithful. I was pretty bummed out Monday about the performance of the site and the unanticipated supply constraints . Then I got a call from a dear friend who just found out that her mom has pancreatic cancer. I can't begin to tell you how silly I felt--how I could let something so trivial affect me when there's so much more to life. My grandfather always told me never to cry over something that can be replaced--and as we ready to install our new server, I've realized once more how wise his words were.

Have a peaceful night.


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