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The Tail of Two Tapes


Mama warned me 'bout days like this!


Crossroads, will you ever let him go?
Will you hide the dead man's ghost?
Or will he lie, beneath the clay?
Or will his spirit roll away?

(Allman Brothers)

Good morning and welcome back to the swarming. Hoofy pounced on the previous trounce and ushered to town a marginal bounce. While the news from the hill didn't get any better, the bulls tried their best to become the trendsetter. "The earnings we saw were all nice little ditties," we heard from the crew out of Matador City, "and the Red Dye pooh bears (who aren't real witty) will soon warrant all of the Minyanville pity!" Can the bovine now climb and reach their stock prime or will Boo and his friends turn the ship on a dime? It's a spankin' new day in the critter soiree so let's take a sniff of the Minxy bouquet!

The "he said she said" tape continued yesterday as Elmer basically repeated his missive on the hill. This time, however, the liquidity filled the right side of the glass and ushered in higher equity prices. It wasn't pretty (or easy) but when the dust settled, the Minx recaptured a niblet of Tuesday's clubbin' (depending on the index). With earnings coming in better (on the whole), the bulls are hoping that psychology will once again embrace the fundamental metric and view higher rates as a necessary by-product of economic strength.

When the Minx becomes murky, as it is now, I like to revert back to blocking and tackling skills. That means I focus on the most basic trading elements and tighten up on both risk and time parameters. If we rally from here, the "snazzy" earnings and Elmer's green thumb will be credited as a catalyst. If we fall outa bed, the prospect of higher rates (and subsequent asset class shuffle) will be named in the blame game. Either could happen, my friends, and while I'm leaning towards the latter (and view yesterday's bounce as corrective), I'm not making sizable bets until I see the whites of their eyes.

From a technical standpoint, we've got our fair share of issues to sort through. Tickles has done a superb job of providing a road map and that, coupled with Brian's analysis of the corporate street signs, offers Minyans both insight and elements to watch. I continue to sense that the rolling volatility (metals and oil and bonds--oh my!) will find its way to the equity fray and shake the snake wide awake. And while I do agree that the specter of higher rates is somewhat "known," I'm unsure the degree in which the carry trade will be unwound.

We power up this frisky pup to find the European bourses slightly pink, metals hangin' on a branch, the dollar givin' a little greenback and the stateside futes digesting the PPI. Earnings are also all over the place with last night's biggies better, for the most part, with the exception of Kla-Tencor (KLAC:NASD). KLAC is a huge tell for the semi space so please watch these names as we approach SOX 474 (200-day). And think positive, Mon Frere, we've got a lot to be thankful for.

Good luck today.


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