A Morning Schvitz
If AIG spills the rest of the financials, it's all over but the shouting!
In what can only be described as a last ditch effort, I've begun to follow Slaino to the gym to join him in his early morning workouts. Imagine my surprise when, after a rather painful spin class, we stepped into the steam room for a little schvitz and--low and behold--Hoofy an Boo were engaged in a full fledged debate. It went a little something like this:
Boo: You're sweating a little over there, big guy...what's a matter, the stress getting to you?
Hoofy: You know Boo, karma always comes full circle and your constant rooting to the downside will come back and bite you in the can!
Boo: Who's rooting? It's reality, Hoofy, and I'm simply playing the game by the rules you made! I didn't hear ya bitching and moaning when stocks were rallying 20, 30 points a day! Now that the mojo has kicked in the other way, you're so quick to look for somebody to blame! It's not MY fault--it's called the b-u-s-i-n-e-s-s c-y-c-l-e.
Hoofy: Don't talk to me like I'm a four year old, I understand the dynamics of the market. Forget it Boo--I can't deal you when you get like this. Let's just focus on today. I see that Prudential upgraded CPB and SLE. In addition, AVP boosted their forecast and, after the beating the consumers have taken, perhaps they'll be able to find some traction.
Boo: (said with sarcasm) Wow...that's really bullish Hoofy--you must be pumped! On my side, Dan Niles at Lehman was cautious on the semis (and I.T spending), ALA reported and their outlook was dismal, AIG announced an oh-by-the-way $1.8 billion dollar charge (and it's looking down 4), JPM downgraded IPG and CS First Boston punted MAT. Also, and perhaps more important, the geopolitical chatter got much louder overnight as the specter of a North Korean conflict increased. This is no joke, Hoofy--the world is a very scary place right now!
Hoofy: You're right--there's no denying that. However, it's always darkest before the dawn and it's almost pitch black out there! I know Toddo's stochastics aren't great timers but, in all the years he's watched them, they've eventually been proven right. I'll be watching Snoop Tone's work to see when the intermediate stochies confirm and when they do, you'd better cover your butt!
Boo: Listen, Hoofs, I like you...I really do. Just be careful. The recent sideways action occurred under resistance (S&P 870) and that "churning" is often an ominous sign. Further, it's possible for an oversold condition to be alleviated as a function of time (not price) so, the longer we sit here, the less oversold we'll become.
Hoofy: I'm looking at S&P 840ish as the only discernable support between here and the October lows. In the Nazz, NDX 980 is "a" support while NDX 950 is THE support. As far as tells, I'm keying off the financials (AIG ripples), the Semis (Niles ripples--would that be "nipples" Greg?), the retailers (consumer proxy), the dollar (needs to stay firm), gold (angst index) and our internals.
Boo: That's cool, fool--I'm looking at S&P 870 as THE resistance and NDX 1010 as "a" resistance. In addition, and I can't stress this enough, keep half an eye on Latin America. With all that's happening overseas, our neighbors to the south have slipped off the radar. I can't point to a catalyst, but something tells me that something is gonna kick up there--it's only a matter of time.
With that, they both jumped up, wrapped towels around their waists and made their way to the shower. There was a lot of work to be done and now that they took care of their bodies, it was time to take care of business. As they were they were leaving, Boo turned around, looked at Slaino and I and said "Ya'll be careful out there today--it's a treacherous tape." Truer words have never been spoken.
See you after the opening.
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