By Todd Harrison Mar 31, 2004 8:25 am
You always wanna see what the folks on the OTHER side of your trade are thinking.
"Now listen this is your last week of unemployment insurance, either you kill somebody next week or we're going to have to change your status."
--Dole Office Clerk, History of the World: Part I
Good morning and welcome back to the Shim Sham. Yesterday's stride was a chip choppy ride that almost skinned Boo and his furry bear hide. "I thought for a bit that the fuse had been lit," said Hoofy the bull (he was feeling legit), "but my buddies just quit and I have to admit that the fence sitting folks are just scared to commit." Can the bulls finally jump on this technical bump or will Boo once again turn the tables and dump? It's all in the name--and today is the hump--so feast on this tape and get pleasantly plump!
Have you ever had the sense of vuja de? That's when you've seen it all before but choose to forget what happened. That, in a word (or two), is what Boo is preaching to the choir and I suppose you can't blame him for being a bitter critter. Everywhere you turn, a Fed governor, politician, market prognosticator or taxi cab driver is talking about the great state of the tape. And no matter how hard he tries to remember the lessons learned (and those once spurned), the Minxy liquidity is absorbing his very best efforts.
Professor Succo--who I maintain is one of the sharpest volatility traders ever--hit the nail on the proverbial head yesterday. There IS a chance that the Elmer's Glue will save the zoo and we'll live happily ever after. There is also an assigned probability (whatever that may be) that our financial foundation is resting on borrowed time. Think about it--soaring commodity prices, lack of jobs, sluggish growth (save the stimulus)...if I didn't know better--and I may not--I would swear that Econ 101 defines that as stagflation. And when juxtaposed against a service based economy (read: subjective valuation), the image of a house of cards flashes in my crowded keppe.
John and I make a point to grab a seltzer once a week and we often discuss the state of affairs (along with more important topics such as family and friendship). I think it's safe to say that we're both "concerned" about the "bet" our Federal Reserve is making and our dependency on foreigners to support our debt markets. While none of us possess a crystal ball--and views are pure conjecture--it's our belief that a disconnect exists between what "is" and what's perceived to be. You'll rarely hear the "dark side" from the teletubbies (it's in their collective interest to sell the American dream) and, let's face it, we've been conditioned to believe that it'll all work out in the end. Our goal, if nothing else, is to present a realistic assessment such that every Minyan can make educated decisions.
With that said (and thanks for listening), the near-term market dynamic is dicier than the Bellagio. While it's my sense that we'll see a "re-test" of lower levels (at the very least), I've learned to respect this beast during the last 14 years. Can they rip and roar? Cookie--they can do whatever they want. The financials are the rock of Gibraltar and they stick out like a sore (green) thumb. Still, folks seem a bit...complacent...regarding the rear view of the corrective process and lotsa shorts have covered up and gone home. That must be factored against continued resistance and the big 'stinkin unknown that is Friday's jobs data.
We power up this morning to find Europe sticky, the metals jiggy, the dollar icky and this jucture tricky. S&P 1125 is a level on alotta radars and we're peering through that now. The next test for the S's will come into play at S&P 1134-37, which is the 50-day and the '04 breakdown zone. NDX 1450-60 and Dow 10-4 are also areas of technical contention and bear watching as we trudge forward through the muck. Finally, if you're not current on the Yen situation, be sure to read Succo's morning piece. He's on it like white on mice.
Good luck today.
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