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The Switchback Trail


As Ruby always said, "Think Positive!"


Good morning and welcome back to the happy clam. With yesterday's spirited sprint, the Minx effectively lured technicians into the mix with her close above recent resistance. It was, by all accounts, an impressive showing and her sexy slink has become the talk of the town. Will her last leap clear the way for further follies or will the smitten kittens once again get bitten? Strap yourself in, my friends, for it's Hump Day in Minyanville and it promises to be a wild ride!

Earnings season is chugging right along and the reports (for the most part) have pleasantly surprised the street. In the process, the fundies have assumed a leadership role among our tradable metrics. While visibility is arguably guesswork, the "what-have-you-done-for-me-lately" crowd breathed a sigh and started stamping black tickets. When we factor in yesterday's technical giggle, the giddy psychology and the structural metric that's (seemingly) equity friendly, the obvious question becomes: Who will stop the gains?

It's been a while since the momentum crowd had the mojo and I suppose that question can be answered with another question: Is this time really different? Selling hope and buying despair has been the single best trading strategy over the last three years and unless we HAVE turned the corner, these levels (price and sentiment) will prove to be compelling sales. Clearly, I'm not a buyer of hope but, at the same time, I am a humble enough to understand that, in our business, perception dictates reality.

This is the fifth or sixth sharp lift since the grizzly began and each time it was THE bottom. During each of these sprints, the collective psychology was sure that the worst was over and the fear of losing morphed into a fear of missing. The current combination of complacency and bullishness has an eerily familiar ring to it but investors have turned a deaf ear. For all we've been through, they'd rather see the damage than listen to the warning signs.

That's certainly not to say there can't be bullish phases nestled in the muck and, for those who choose to play it that way, S&P 905 and NDX 1100 (former resistance) offer tight support zone stops. I've received a handful of emails asking why I'm not fully suited up in the bear fur into this lift. My response is that my metaphorical imagery will always be an extension of my profile and, as I'm light and tight, I need to honestly communicate that to my fellow Minyans. While this may very well prove to be a false breakout, an assimilation of the metrics dictated an assertion of discipline consistent with my actions.

It's a new day in the fray so whadaya say -- let's get ready to play. Identify a strategy before stepping onto the field, remove emotion from your process and "trade to win." Over the course of time, the mechanics of the swing will prove to be more valuable than the results of the last at bat. Remember, friends, it's a marathon and not a sprint. Slow and steady wins the race.

Good luck today.

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