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Scarlet's Fire


Be careful, Minyans--there are air pockets littered throughout the tape!


In the thick of the evening when the dealing got rough
She was too pat to open and too cool to bluff
As I picked up my matches and was closing the door
I had one of those flashes:I'd been there before--
Been there before.

(Grateful Dead)

Good morning and welcome back to the front lines. We power up our systems this morning to find that U.S led forces are at the ready and it appears that war is imminent. After considerable political haggling and global discord, conflict seems inevitable--and while our prayers focus on the human condition, our responsibilities dictate that we take care of business. It promises to be a trying session, my friends, so take a deep breath and see what we got.

One of our ten trading commandments is that perception dictates reality in the marketplace and that's never been more readily evident. While the "uncertainty card" being used by corporate America is the latest is a stacked deck of excuses, investors seem intent on rationalizing their way through the current malaise. From software to soft soap, the cure for fundamental invisibility seems to be focused on clarity in the Middle East. You may not agree with the reasoning (I don't) but we must respect the power of the psychological metric and factor it into our process.

With that said, I'm monitoring this action with my right hand up and my eyebrow raised. My concerns aren't a function of patriotism--I love my country--it's about the potential risks associated with this "quick" war. Who will fill the power vacuum in an already unstable region? What are the geopolitical and economic ramifications our actions? Is it unrealistic to believe there won't be a terrorist backlash? These aren't empty concerns--they're realistic possibilities--and we must factor them into our decision making process.

I have little doubt that when the sand storm clears, the Minxy malaise will continue to weigh on the collective mindset. That may be a moot point for many traders who are more concerned with relative performance and the very next tick. What I will ask you to do, however, is take a moment to think about your investment objectives and time horizon. There's a fine line between fighting the tape and using prices to your advantage and the last thing we want is to sell out of necessity rather than choice.

As I write, I'm watching the futures get squeezed higher by anxious traders. I can't (and won't) tell you for certain if this move will prove fadable but if history is any guide, it's only a matter of when. Selling hope and buying despair has been the money trade throughout the bear market and unless this time is indeed different, the script will likely follow suit. Just remember, Minyans, it always a new paradigm--until it's not.

Good luck today.
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