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Eyes vs. Ears

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The chasm between perception and reality remains historically wide.

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Wake up to find out
that you are the eyes of the world
but the heart has its beaches
its homeland and thoughts of its own

(Grateful Dead)

Good morning and welcome back to the flickering flack. The Matador Crowd looms large and loud after Hoofy's heroes rallied 'em proud. On the heels of a blink-and-ya-missed-it dose of FOMC reality, the vaunted reversal of fortune arrived and sparked fresh acne in a spate of leadership sectors. While potential flies remain--volume was light, we're ticklin' broader resistance levels and the piggies don't have much pep in their poke--Hoofy is walking with a confident step as he eyes quarter-end.

We walked through alotta the positives yesterday--breadth was fantastic, the brokers and small caps broke out to all-time highs, energy and metals continue through secular bull markets (gold and silver are notching multi-decade highs as we speak), supply is being digested via rolling rotations rather than outright migrations and the occasional sell-offs are 'one and done' affairs. Indeed, the view from my pure trading eyes is demand driven with sprinkles of performance anxiety.

While I've been trading 'em that way--I've discussed recent schnitzels in Apple, Intel and Pfizer, along with long-side efforts in the drillers, SunMicro and the metals--I can't help but sense that we're dancing between the elephants a bit. With the structural imbalances deteriorating, disturbing compression (single digit vols?), an unpopular war, birds in the air, pissed off cows and an administration that is quickly losing the confidence of its contingency, the chasm between perception and reality remains historically wide. And, to answer your question before you ask, I simply don't buy the "wall of worry" argument with fear proxies where they are.

What to do? Respect risk, for one, while remaining conscious for rewards that may conflict with your inner monologue. I don't "like" tech and financials, for instance, but I've found situations where I could make hay while the sun shines. I "love" energy and metals, but there are times that I'll be uber-light as a function of trading around core positions. And while I employ rolling stops to my pure "rentals," I'm quite conscious that we can walk into a tape one day that renders them obsolete via an exogenous shock. In short, these are interesting times in a complicated world and we must constantly adapt and improve if we hope to compete.

On the housekeeping front, I wanna touch on two quick topics before we roll up our sleeves and get down to business. The Final Four will tip off on Saturday night and interested Minyans will be watching in kind. We hold our annual brackets in the 'Ville for purposes of critter bragging rights (and a snazzy gift) and, more importantly, to allow those who missed the right (but not the obligation) to donate (what they can) to the Ruby Peck Foundation for Children's Education. We've already received a handful of generous gifts and for that, my grandfather is beaming from above. If you're involved--and only if you can--please help us make a difference in the lives of our kids.

Finally, as the Buzz is palpable as we edge into nice weather, we'll have the official word on the upcoming Minyans in the Mountains as early as next week. We're busting hump at MVHQ to build an experience that will top Ojai--if that's possible--and this year's fete will take our "Sundance of Finance" to an entirely new realm. We've already received our RSVP's from mssrs Santoli, Saut, Shobin, DeMark, most all of our excellent Minyanville professors and some heavy hedge fund hitters in my circles. If the purpose of the journey is the journey itself, please try to join us August 10-13 as we continue to find our way. Together.

Good luck today.

R.P.

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Positions in AAPL, INTC, PFE, SUNW, drillers, metals
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