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Prayers and Scares


There's nothing wrong with a little Duran Duran on OUR time!


You saw me standing by the wall, corner of a main street
And the lights are flashing on your window sill
All alone ain't much fun so you're looking for the thrill
And you know just what it takes and where to go.

(Duran Duran)

Good morning and welcome back to the Paddy Shack. A drunk skunk arrived in the 'Ville yesterday and seemed to get lost in the crimson soiree. "We had breadth to the left and banks to the right," he said to his friends of the most recent fright, "but leading the charge with all of its might was crude with a 'tude at dizzying heights!" Can Snapper arrive on the Minyanville scene and paint all our screens a glimmering green? Or will Boo and his crew continue to lean on fragile support (those bears can be mean!). We'll know soon enough as we suck down the 'jo and ready ourselves for a minxy new show!

The General's Motor (GM) stalled yesterday and offered food for thought for those who bought. While the "miss" was predicated on a slew of bad news, the concern in the marketplace wasn't equity related. Brian Reynolds of MS Howells & Co.-who has been spot on with his educational analysis-has been discussing the magnitude of GM debt and the outsized influence it has on the credit markets. The potential for further widening (spreads) introduces a domino that could have a profound influence on our financial fabric. The script isn't fully developed, mind you, but investors are already reserving exit rows in the crowded theater.

That was one subplot in what I described to a friend as a "perfect storm on the catalyst front." The other influences (crude, technical inflections, earnings, expiration, rebalancing) remain in play and must be weighed as we construct our risk profiles. Of particular note is "skin of the teeth" support in the SOX (417), NDX (1480) and DJIA (10,600). With the S&P breaking the uptrend from October (1195), crude bustin' through previous resistance ($55ish) and the banks below the 200-day (BKX 99), Hoofy can ill afford to lose those shoes.

I traded "old school" yesterday and double dipped into my metaphorical fur. The genesis of the decision was predicated on the above mentioned dynamic and the sense that a disconnect remains between perception and reality. As psychology is the most subjective of our four primary metrics, "gaming" the arrival of reality has been a lesson in frustration and futility. And while it's too early to tell if the GM news is the catalyst for further fret, the psychology seed was planted as their credit spreads wishboned.

Effective trading is a function of proper assimilation and, as such, I continue to use technicals as a framework of my risk profile. Having put two legs in the bear costume near the opening, I assigned an S&P 1206 "stop" (risk definition) and, later in the session, removed an appendage (leaving one) as we tickled the NDX 200-day. My goal, so you know, is to share my process of "ebb and flow" with hopes that it adds value to yours. Nothing I communicate should be construed as advice because, quite simply, I'm not privy to your unique risk profiles or time horizons.

We power up this jammy pup to find Europe flattish (surprising), the Nikkei slippy (- 80 bips), crude over $57 (yowza!), the metal/dollar duopoly flattish and stateside futures sittin' in headlights. Please keep a keen eye out for Goldman (GS) and Mother Morgan (MWD) as they're both due to spew any minute. Again, these names will trade on what will be (rather than what was) so be careful if you're mixing it up with the Dukes.

On a housekeeping note, please don't forget to enter your March Madness Minyan Brackets by high noon today (password: minyans). The winner of the NCAA tourney test will get to choose from a slew of fun prizes while those who miss the mark will have the right-but not the obligation-to make a donation to The Ruby Peck Foundation for Children's Education. You don't have to be a hoops fan to participate (Macke!) and if my sniffer is on, we'll raise some good money for the kids.

Thanks kindly-and good luck!

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