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The Gong Show

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The semis, financials and breadth should tell you all you need to know today.

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Good morning and welcome to mean, mean dancing machine. Yesterday's show began with a glow but couldn't support the late day red flow. "It looked pretty good from what I could see," said Snapper (who is now down on his knees),"but when I began my (yawn!) shopping spree, I heard a loud gong from the ursine emcee!" Can Hoofy bounce back and trot through the muck? Or is Boo now in good with that freaky guy Chuck? It's a new day of critters and you know the drill, so let's all get rockin' and stroll through the 'Ville.

After Monday's rally got faded like a pair of Levi's, the bulls (and turtles) found themselves in an unfamiliar position. Where was the late day rip and what happened to those VWAP (volume weighted average price) buy programs into the bell? They've been the feather in the cap weighted index and have offered a common thread throughout this long winded rally. What does it all mean and, more importantly, are there any implications for the trade ahead?

We've touched on several developments and divergences recently and that may have contributed to the pause in the upside cause. To be sure, there will always be reasons to be long or short at any given time and the direction will dictate the reason for the rhyme. Yesterday's relative lethargy was likely a combination of two massive unknowns (Cisco (CSCO:NASD) tonight and Beeks on Friday), an overbought tape, looming resistance, fat pockets, the bloated budget and a new electoral specter.

That's not to say that we can put a fork in the Hoofster just yet. While my sense is that the downside has more meat to the bone, we must recognize both sides of the trade. The Semiconductor stochstics are edging into the green zone (the semicaps were booted last night at Goldman), our key levels have thus far held (S&P 1115-1120, NDX 1450), the financials are sticky green, Dogg, and speculative trappage is alive and well. Just check out Taser International's (TASR:NASD) reaction to last night's earnings. With no borrow in the name (read: no more shares available to short), the unfortunate souls already betting that way are covering up 20ish. Think Dr. Evil. "Ta-zer!"

Away from the equity fray, the dollar is getting thumped this morning and I'm picking up three stories. One, terrorist concerns were reignited after ricin was found in the offices of Senate Majority Leader Bill Frist. Two, speculators are expecting officials to voice concern that the Euro is straining European economies during this weekend's G7 meeting in Rubyville. And finally, The Washington Post is running a story saying that "the US will not intervene" to stop the dollars slide. I can't imagine that the budget chatter is helping matters either but this is what I'm picking up.

We ready for today's treat with much the same dynamic in play. Many of the internal indicators have "worked off" their overbought readings but, at the same time, those pesky negative divergences (and the outside week) are still out there. These are dicey times, Minyans, so remember to choose your risk carefully. It takes a lot of hard work and elbow grease to secure a profit and a momentary lapse of judgment to give it all back (and then some). Stay on your toes, remain lucid and above all else, think positive. It all starts within.

Finally, on a personal note, I would like to wish my beautiful mother a very happy birthday. This is a big one, mom, and I'm proud of you for all you've accomplished and the woman that you are. Raising two sons by yourself couldn't have been easy (especially when one of them was me) and I respect that more and more as I creep up the ladder myself. Shine bright as you do every day and know that Ruby is beaming from above.

Good luck today.
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