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Hump Day Hop Scotch


...human capital will always have a place in the Wall Street race.


A Tale of the Tape...

Good morning and welcome back to the swarming. The giggles have ceased in the City of Critters as the Matador Crowd has a case of the jitters. After yesterday's snazzy jazz to start the flickering bickering, Turnaround Tuesday lived up to its name and closed the show near session lows. It was a disheartening effort by the once brazen bovine, surrendering an eye-popping effort by the semis, flummoxing the unflappable financials, gagglin' Google back below the 200-day and, perhaps most importantly, slipping the old school slightly under acne support at S&P 1300.

While market breadth was heavy all session, a rather noticeable N's over S's dynamic was ever-present out of the gate. Not a shocker, I suppose, as the semiconductor stochastics are coiled at the bottom while the piggies (BKX) twist at the top. That dichotomy was responsible for the early tech outperformance, which had the four-letter freaks seemingly intent on breaking through to the other side of NDX 1700 (and thus rendering the long-standing dandruff obsolete). Alas, Boo played whack-a-mole and made a stand, sending the sirens scattering and setting up a technically ominous "outside day."

Will Softie Serve as a Flaccid Fixation?

Microsoft has shocked the Street by delaying the next version of Windows software until after Santa has digested his cookies. As personal computer makers were relying on a November release to boost holiday sales (roughly 30% of purchases), chatter abounds that the Grinch may have already stolen Christmas. That remains to be seen, particularly as Boom Boom and his merry chorus of dwarves will seemingly say anything to assure the Who's of Whoville that the where's, when's and why's of fiscal imbalances and inverted yield curves needn't be a worry. Oh, the places we'll go...

For my part, and as long as we're talking tech in general and Wintel in particular, I've been eyeing Intel as it feels somewhat washed out. Pepe Depew spoke about the Mother Chip last week and I further opined that it was likely being constrained (near $20) by expiration influences. I understand that "things are bad" at the once headed horseman but given the stock is off 25% from its January peak and today's Microsoft news should be a harsh punch in the gut, I'm gonna buy a bit with a very tight stop below the 2004 double bottom (I'll leave a bit of wiggle room below $19.65). This is a pure trade with uber-defined risk as opposed to, say, SunMicro which I've put away for a rainy day.

An Unavoidable Secession?

Old school Minyans will remember a scribe I vibed called State of the Art. Further, Minyans who vibed in the Ojai Mountain air shared my fare on the evolution of Wall Street and emerging trends for the industry. The consistent theme in both scenes was the fact that the traditional Wall Street research model is an antiquated approach. As research expenses can no longer be offset by investment banking revenues, sell-side firms are finding it increasingly difficult to justify this loss leader.

We saw signs of this dynamic manifest last year when Smith Barney sliced off its technical research team. We've also seen numerous smaller shops chop this functionality out of their product mix. Today, Mother Morgan announced that they're planning a reduction in research jobs. The writing is on the wall as we edge through this age of automation and, just as increasingly popular electronic trading systems have impacted the sales trading side of the business, we're gonna see a similar scenario unfold in research departments around the globe.

What to do? I actually have a solution, one that will monetize information and keep research analysts as a vital part of the equation. Alas, I must further flesh out these ideas before sharing them with thy faithful. Suffice to say that I believe that human capital will always have a place in the Wall Street race. We'll simply have to adapt to the times and roll with the punches if we wanna step through this truly historic looking glass. As John Succo and I are apt to say at our weekly Succofests, our world continues to get interesting and interestinger.

Good luck today.


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Position in SUNW, INTC

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

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