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D.C. Comics


The devil made me do it!


Good morning and welcome back to the critter shack. Yesterday's trip tightened the grip 'round the necks of the bears who have now all been flipped. "You reap what you sow," Hoofy said with a glow, "now my giggly bull friends are all rolling in dough!" "Think what you will," Boo quickly retorted, "your sense of the world is greatly distorted!" Which critter will dance in a light that's so bright it'll blind you with all of its marvelous might? The answer, my friends, may be unanswered still but we'll soon sniff it out as we romp through the 'Ville!

The Monday giggles were a function of a few connecting dots. The seeds were planted last week during the (oversold) rally, nurtured by an uneventful weekend and fed by a chorus of cheerleading analysts. And so it is, three short sessions after the "imminent demise" of our financial foundation, a collective gust has saved us from bust. Now, with the (bullish) internal measures alleviated and the bears chasing their tails (and shorts), we're staring directly into the technical triple lindy (S&P 1125, NDX 1450ish, Dow 10-4). Funny how that happens.

The landscape is painted, the payroll data is looming and the fundies are slowly starting to emerge on the radar. With that said (and respected), I wanna briefly touch on something that isn't today's business. If you sense I'm walking funny, it's because I'm on my tiptoes as I delicately dance with this sore subject. We've discussed the psychology bubble for some time and I continue to feel that it poses serious risks to our system. We know from experience that it can "inflate" more than anyone anticipates but still, I can't shake the feeling that something sticky is gonna emerge on the political front. That's always been in the back of my mind and the more it resonates, the more I feel the need to communicate it.

Sentiment is an effect (rather than a cause) and as a function of last year's returns, folks far and wide once again feel entitled. Still, the Minx has a menu of fish to fry as we wade through an unprecedented reflation attempt by the Fed. History teaches us that intervention, regardless of its scope, may buy time but rarely (if ever) provides a cure. My fear is that with everyone on the "we're alright until the election" train, the market is ripe for disappointment. Maybe I'm wrong and we're in Bubble: Part Deux (possible), but you should always see both sides of every trade before risking your hard earned capital. And now you do.

Understand that my only agenda is to address potential risks and make ye faithful aware that they exist. These are bi-partisan concerns, mind you--this isn't a political column and that's not my forte. My focus, quite simply, is on the financial ramifications associated with a shift in mindset of the masses. Psychology is subjective and, as such, the most difficult trading metric to quantify. The best we can do is appreciate the outcomes, assign a probability and position ourselves accordingly (while allowing for a margin of error).

We fire up our coffee cup to find the world in meander mode. Europe is mostly lower (FTSE is green), gold is slightly higher (doing "work" at $420), the dollar index is off 30 bips and the futes are pink as they stare at upside resistance. We've got "some" room up north before "buy stops" are elected but we'll cross--or jump off--that bridge when we get to it. In the meantime, put your game face on and think positive--it all starts within.

Good luck today.


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