Footloose and Fancy Free
By Todd Harrison Mar 30, 2005 8:03 am
There's nothing wrong with neckties!
I been working so hard
Keep punching my card
Eight hours, for what?
Oh, tell me what I got
Good morning and welcome back to the Hump Day flack. The Minx is repeating, or so it would seem, as every new day is sharing a theme. With breadth that's a mess and leaders in flight, the jittery critters are shaking with fright. "Where are the bids to close out the quarter?" asked Hoofy the bull in udder disorder, "The battling bears are massed at the border awaiting Sir Boo to give 'em the order!" Will white flags soon fly all over Red Dye or can they digest the endless supply? We'll know soon enough as we ready to thrill and dig in our heels for a romp in the 'Ville!
Yesterday's session started harmlessly enough-Wall Street was wagging with oversold tales and Hoofy was set with wind in his sails. While it's true that the downside bungee is somewhat extended, the seemingly endless range trade (see the VXO) has conditioned investors to buy dips and sell blips. When the former extends beyond a comfort zone (or the latter fails to materialize), angst levels start to uptick. That's what we're seeing now and tension is heightened as a function of quarter-end.
We often talk about the importance of time horizon and this a good time for a quick refresher. From a big picture standpoint, the FOMC "wiggle" last week set a stealth series of dominos in motion. The hint at inflation buried bonds which, in turn, raised yields and made the dollar relatively more attractive. That got folks thinking about the specter of tighter money and commodity vehicles (metals, crude, CRB)-along with supply/demand driven equities-- let some pffft! from their bubbly persona.
Fast forward to yesterday. While potentially seismic structural shifts simmered in the background (GM, AIG), traders were trying to find a stride so they could pen their quarterly letters with momentum. To say that the tape was fragile would be akin to saying that I don't mind peanut M&M's. The drama at my old stomping grounds (MWD) was a feather on the back of the XBD that pushed it through support (144) and the piggies were all too happy to piggy-back on the downside. That quickly ushered breadth (our single best intraday tell) 2:1 negative and the rest, as they say, is history.
There's no rest for the weary as, after an all-too-short overnight respite, the drama will continue today. Lotsa levels are circled on yellow sticky pads across the Street with things like "SOX 410," "S&P 1050-60" and "DJIA 10,375." Those zones have been on our radar for a while and it shouldn't come as a shocker that 200-days are looming larger in the periscope. Our task at hand is to assimilate our primary metrics and discern how to apply the technical leg to our risk management table.
We power up this Hump Day pup to find pink overseas bourses, a flattish dollar/metal duopoly and pale green stateside futures. The news flow is relatively quiet although Beeks is peeking around the corner with the orange crop report. Please pay particular attention to the aforementioned levels, market internals, macro-monolithic movements and intramarket rotations. There are alotta agendas in play-let's make sure that yours includes finding your way to an enjoyable Final Four.
Good luck today.
No positions in stocks mentioned.
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