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Morning Dew


The hump day fray!

  • Google, the modern day proxy of speculative moxie, has become the harbinger of investor psychology. While their latest earnings report may have been a shot across the bow, yesterday's admission was a stern torpedo. Was this "new news" or an obvious and intuitive observation? Team Google will host an analyst day tomorrow and walk the Street through their thought process. Both Snapper and Boo will be in attendance, rapt with attention and anxious to prove their points.

  • CRB 320 held yet another test yesterday. As the 200-day moving average and, more importantly, a multiyear trendline, this level should remain on ye radar even if you're not a commodity playa.

  • It has technical price implications for everything from gold to crude, coffee to copper, cattle to cotton and cocoa to corn. And, if you believe that we're entering an era of "dollar devaluation" vs. "asset class deflation," as I do, it has implications for the greenback as well.

  • A few Minyans asked why I'm eyeing Newmont Mining $50 as a level of lore. Glad you asked...
    • $50 represents multiple tops in 2003 and 2004 as well as the trendline from last summer's low.
    • I've long said that Newmont and Schlumberger are the Microsoft and Citigroup of tomorrow.
    • Metals and energy, while getting a bit 'hot' in the near-term, are still underowned by the fund community on a relative basis.
    • I lightened considerably on my holdings in this sector (given the parabolic frolic) and $50 represents a 20% pullback from (this month's) high. As we know, the sharpest corrections occur in the context of a bull market.

  • I'll never forget sitting across from the savvy soothsayin' sommelier Jeff Saut of Raymond James at last year's Circle of Trust dinner at Minyans in the Mountains. He mused that the next war would be over water--not oil--and espoused as to why these (water) plays made sense. They made more than sense--they made many dollars--and if "tangible supply/demand" plays continue to outperform, they may be winners for years to come.

  • Levels of lore as we ready for the Hump Day fray? BKX 106 (the financials hold the key to the tape), GE $32.50 (support), HGX 260 (after the homies dipped under the 200-day yesterday), IBM 80ish (right shoulder of textbook dandruff), SOX 520 (50-day moving average).

  • Speaking of Big Blue, I continue to edge through my "long SunMicro common stock/long IBM puts" pairs trade as a real-time example of the thought process behind a position. As the former drips lower and the latter slithers sideways, Minyans are watching my frustration dynamically manifest. The position is still open and, as such, I'll continue to share the fare regardless of my P&L. I've long believed that the best lessons are learned from mistakes (rather than touting winners) although this puppy is far from finished.

  • The VXO (volatility index) was up a quiet 12% yesterday (closing directly at its 200-day resistance). While the percentage movement is eye-popping, these are ripples rather than waves. Old school traders who lived through the Thai Baht debacle, LTCM, Russia's Rubles or the tech wreck understand what real volatility is. While most believe those were outlier events, I'll maintain that the chasm between perception (vols) and reality (the world we live in) is at a historic disconnect.

  • "We can't do it all – not just because our reach constantly exceeds our grasp but because this time we have exhausted our savings, lost our competitive edge and squandered our educational heritage." Guitar Signee Bill Gross, in his frank assessment of our state of the union.

  • And finally, this announcement was recently made in the great white north. Syracuse area Minyans are welcome to attend:

    2. The Corner of Wall and Sesame

    Todd Harrison, CEO and founder, Minyanville and Kevin Wassong, President, Minyanville
    Syracuse University--Newhouse School of Communications
    Monday, March 6, 7-8:30 p.m., room A-1

    Two SU alums have managed to turn the often stuffy, intimidating world of high finance into something accessible to everyone. launched in the fall of 2002 with animated cartoon characters that help make the world of markets and money understandable. The site merges financial content with entertainment (think music + entertainment = MTV or science + entertainment = Discovery Channel).

    Mr. Harrison is a 1991 SOM grad. Formerly a vice president at Morgan Stanley and president of the $400 million hedge fund Cramer Berkowitz, he started after reassessing his life post 9-11. Mr. Wassong graduated from Newhouse in 1990. He is the former founder and CEO of J. Walter Thompson's interactive marketing and development group digital@jwt and spearheads the interactive component of Minyanville.

    A relaunch of the site in March 2005 brought a new look and expanded features such as a real-time "Buzz and Banter" section that allows users to track the financial conversations of Mr. Harrison and his talented staff of 25 high-profile investment analysts. Cartoon characters like Hoofy the Bull and Boo the Bear help explain all. Check it out for yourself at

    The topic for their lecture will be "The Future of Integrated Media and Content." The pair will talk about what they see happening online and/or converging in the future. All of you wishing for a crystal ball can get your answers next Monday night.

    Please let me know if you have any questions. See you there!

  • Good luck today.

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Positions in SUNW, IBM, financials
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