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LA Woman


Welcome back Minyans!


Good morning and welcome back to the saddle. I took a few days to be a good friend and soften a loss most can't comprehend. It was a somber weekend full of celebration as a special woman was laid to rest. If we measure ourselves by the life in our years rather than the years in our life, we would be lucky to leave such a loving legacy. Minyanville is about figuring out the financial fray but that quest should never cloud our true purpose. As we ready for a fresh week of flickering ticks, I am reminded once more of the fragility of life and the value of time. Thank you all for being a part of my journey.

While I was "radio silence" for the better part of the past two sessions, I backtracked this morning and reviewed the clues. The sparkles in the dark were obvious as upbeat earnings offered ample pause for the ursine cause. With a respectful nod to the fundies and quite conscious that we're still oversold, my primary take-away from last week's fray was:

  • That the sharpest rallies always occur in a bear market.
  • The S&P (under 1163) and the NDX (under 1460) remain entrenched in a textbook churn (under resistance).
  • The financials, on the wrong end of a rotation, never found firm footing.

The lopsided (short-term negative) sentiment, bandied about for quite some time, seemed to finally kick in on Thursday. Still, and while this is a throwaway thought, the spectacular sprint seemed somewhat curious to these old eyes. The 4:00 AM "while we were sleeping" spike seemed as if a coordinated agenda was in play. This may have been a function of a few directives but it trapped the pressers and kept Boo on his heels through the checkered flag. We abated a bit Friday (late Snapper notwithstanding) and finished the week marginally higher but still in Red Dye.

What seems to be shaping up is the sector sparks vs. swimming sharks. On the one side of the ledger, we've seen positive earnings in the net space (Google (GOOG), Yahoo! (YHOO)) and select big cap tech (Texas Instruments (TXN), Intel (INTC), Motorola (MOT), Nokia (NOK)) in the context of "heelsy" field position. On the flip side, the big ugly financials (General Motors (GM), Fannie Mae (FNM), Amer Int'l (AIG), and MBNA (KRB)), consumer proxies (Wal-Mart (WMT), Target (TGT), Costco (COST)) and the looming macro conundrum are legitimate threats. And the simple fact that Elmer is going out of his way to quell stagflation fears is proof positive that it's on his radar as well.

I'm not going to dwell on my big picture concerns as they're old hat to most Minyans. Suffice to say that the combination of stubbornly sticky input prices, paltry savings and a hawkish FOMC isn't the preferred path for the Matador Crowd. We're a debtor nation at every level --consumer, corporate and government-and we can only duck the mailman for so long. As disposable income and credit lines dissipate-or interest rates twist our collective ARMS-we're gonna find ourselves in a profound funk. Whether the future is now depends on the collective psychology and therein lies our task at hand.

We power up this Monday pup to find a pink Europe, a firmer greenback, laggy metals and a chock full of catalysts on tap. Given the wishbone dynamic described above, all eyes will be watching for stagflation validation (or lack thereof). We remain nestled in a wrestle between perception and reality and each data point will be finely combed through. My sense is that Boo has the baton below Dean Wormer (double secret) resistance (S&P 1163/NDX 1460) as I watch our tea leaves and calibrate our critter compass.

Good luck today.


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