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Dancing on a Pinhead


Don't try to swallow everything at once, just chew on it one bite at a time.


"Hold me closer tiny dancer
Count the headlights on the highway
Lay me down in sheets of linen
you had a busy day today"

(Elton John)

Good morning and welcome back to the quivering quack. With last week's news now in the rear view, we power our tower with another lit fuse. The previous data fed Boo a bit fatter but the bulls aren't sure that this rate chat will matter. "The bears will believe what they all want to see," said Hoofy the bull (it was more of a plea) "but I'll say this once and I think you'll agree, the downside buffet is no guarantee!" It's earnings and Beeks and Elmer, oh my, so let's settle in and give it a try!

The script typically dictates the story and that certainly was the case last week. As a function of the lethargy..nah, the rate-sensitive names, the focus was Elmer and the inevitability of hikage. While Boo welcomed the carnage, I told our furry friend that the migration of perception takes time. Remember how quickly folks jumped on the "Don't fight the Fed!" bandwagon when the snippage began in earnest way back when? I point this out as a matter of perspective (as you can be sure that a rally would erase alotta the media attention this is currently receiving).

That's not to say that there aren't causes for concern--we've documented the litany of issues in this space (for quite some time). I continue to believe that there's a disconnect between perception and reality and I'm still trying to identify the appropriate time frame in which it will correct. Insider sales, geopolitical "issues," widespread (blind) belief, astonishing complacency (VXO) and steroid (stimulus) abuse top my list but certainly aren't inclusive. And again, a bevy of green screens (and the benefit of hindsight) will morph these concerns into a venerable wall of worry.

170 of the S&P 500 companies will spin their spew this week, as will Elmer (starting tomorrow) and Senor Beeks. I sense that the bulls still wanna see upside confirmation (strong earnings and economics) despite the rate implications but the waters have muddied with regard to the collective expectation. One thing for certain, if the markets start to sniff out further signs of inflation, it'll paint the Minx into a corner. We all see it--whether it's at the gas pump, doctor's office, real estate broker or college admissions office--but if it seeps into the pricing mechanism of the marketplace (despite the Bureau of Labor Statistics' best efforts), we could have some blood on our paws.

With April paper six feet under, expect the first few hours to be accompanied by the option square dance. Then we'll likely dig in for the week with Elmer (directive please!), earnings and oil setting the tone. Watch S&P 1123 (support) and 1134 (50-day), NDX 1450 (first support) and 1400 (200-day and 'better' support), SOX 474 (200-day) and BKX 98 (former support) as levels in our midst. And think positive, cookie, for if you don't believe in yourself, you're halfway towards the loss column.

Good luck today.


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