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Monday Morning Quarterback


When we speak of the next leg for the tape, we may be served well to watch the dollar.


You could have a big dipper
Going up and down, all around the bends
You could have a bumper car, bumping
This amusement never ends

(Peter Gabriel)

Good morning and welcome back to the flickering pack. We power up our Monday pup to find a frigid Gotham, a happy Marty and a whole lotta questions regarding the next leg of our journey. Indeed, on the heels of a week filled with all sorts of worries-from higher rates at the Japanese ATM to fresh sub-prime fodder to saber rattling in Iran-the masses are on the edge of their seats as we open the envelope for a fresh five.

Given the ample excuses for a sell-off, not to mention the seemingly forever stretch since we've last had one, the action last week coulda been worse. There have been two incessant characteristics of this most recent bovine run-the bend (not break) nature of the financials and the broader ability of "rolling rotations" to steal the spotlight from outright migrations. The former warrants our attention as they were sloppy (for the first time in a while) on Friday and the latter seemingly remains in play (as highlighted by the recent rotation from the homies into the semis).

The technical lens provides a nice and tight context as three proxies test previous breakout levels. They include the S&P (above 1450, with another nod to the trendline at 1445), the banks (above BKX 119) and the emerging markets (above EEM 117ish). The Matador Crowd held their lines on Freaky Friday, choosing instead to pass the baton to a full rank of fresh legs this week. Saddle up Minyans, and let's punch some doggies and shake some shekels from the minxy tree.

  • So, what was the catalyst behind last Wednesday's meaty gold move? I still think it had geopolitical undertones, although we may never know for sure. Either way, "see" the importance of XAU 150ish for metal shares, along with the reverse dandruff should we edge through there.

  • Asset class deflation vs. dollar devaluation? When we speak of the next leg for the tape, we may be served well to watch the dollar. I don't foresee a strong dollar and higher asset classes. However, if the greenback breaks lower, we could hear a fresh chorus of "game on" from Matador City mavens.

  • I like what I own (GSS, SUNW, ITT, PHO, among others), dig the gamma (I'm a spate of cheap puts in the financials) and I've got powder to play either way. I will say this--with the VXO trading with a ten handle, today's 7% lift notwithstanding, the potential for an uptick in volatility remains very much in play.

  • Deep breath, Minyans-those freaky spates of miscommunication aren't your fault! And by next Thursday, they should all but abate.

  • "I was surprised by this, so wanted to share it. The low on the SOX for the past two days in a row is higher than the prior day's high (in other words, we've had back-to-back daily gaps). This has previously just happened three times. 5/24/95, 2/7/96, and 1/30/06 were the next days. The index was lower the next day, 3, 5, and 10 days later for all three occurrences. There were only three occurrences, granted, but the result was so surprising that I thought it was worth sharing." Professor Jason Roney on Friday afternoon's Buzz.

  • I'm slated to hit the left coast for a 24-hour turnaround tomorrow afternoon, as I join our friends at TD-Ameritrade at their Disneyland Apex Live event. Weather permitting, of course.

  • Lots going on behind the scenes at MVHQ so lemme jump and juggle as we get set for our fresh five. I'll see YOU on the other side of the fence, where the Buzz & Banter continues to host the best content in the city of critters. Good luck Minyans and hit 'em hard.


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Positions in metals, financials, GSS, SUNW, ITT, PHO
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