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The Push and Shove

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You want a war, Hoofy? A war you shall get!

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Shaking in the desert, wherefore do you cry
Here there may be rattle snakes to punch you in the eye
Shotguns full of silver, bullets made of glass
String barbed wire at your feet and do not let you pass

When push comes to shove, you're afraid of love


(Grateful Dead)

Deja vu, Boo, these melt ups are becoming old hat for the bulls! There's a thin line between love and hate and, depending on your current take, you're on either side of that fence today. The higher prices are sucking fresh capital into the market and the upside has become a self-fulfilling prophecy. Will it last? That largely depends on your time frame, Mon Frere, and it's time to start asking yourself some difficult questions.

Shockingly, the bulls have become brazen by this latest lift and they'll be the first to shove their views in your face. I will remind you that emotion is the enemy while trading and YOU'RE the one who must live with the results. As such, lucidity and perspective should be consistent elements in your decision making process. Take a deep breath, digest the risk parameters (both ways) and always allow for a margin of error.

Walking through today's tape, there's little in the price action that would encourage Hoofy to make sales as the market is seemingly smitten with the notion of clarity (regardless of world opinion). I don't want (need) to judge whether Dubya's actions are warranted but, as a risk manager, I'm admittedly wary of the potential ramifications. Thus far, the macro indicators are shrugging it off and that's emboldening the fence sitters to jump into equities. There's a difference between respecting the price action and deferring to it. It surely looks purty out there, but it was fugly and red when it was time to buy...

I'm been attempting to exhibit patience as I scan for advantageous risk/reward and that's easier said than done in these types of tapes. I've been of the opinion that we've yet to begin THE sustainable lift and today's action doesn't alter that view. The momentum game has been a killer during the last few years and unless this time is indeed different, the movie will likely end the same. Of course, that's simply my humble opinion and I only share it with the hope that it adds value to your process.

I've got a midtown meeting near the bell so I'll be scooting after the close. There will be good days in the market as well as days when we don't trade up to snuff. I will remind you that the goal is one of consistency and, over time, it'll all work itself out. Good luck, my friends--I hope you all leave today with some jingle in your jeans.

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