By Todd Harrison Apr 26, 2005 8:11 am
While Hoofy has Daisy, I've always been stag....
You can look at the menu but you just can't eat
You can feel the cushions but you can't have a seat
You can dip your foot in the pool but you can't have a swim
You can feel the punishment but you can't commit the sin
Good morning and welcome back to the swarming. The herd has arrived so you better make way as the Matador Crowd has something to say. "Earnings are good and tensions are high," said Hoofy the bull with an eye to the sky, "Recent demand has sucked up supply so please watch your back if you're still in Red Dye!" Will they go the distance and edge through resistance or can the bear clan prolong their existence? It's turnaround Tuesday (sit up and stand still) and ready anew for a romp through the 'Ville!
If you pull out the textbook on technical analysis and turned to the chapter on short-side entry levels, you might find a picture of yesterday's tape. Indeed, with the S&P, NDX and DJIA edging towards collective resistance (1163, 1460, 10,400), the risk/reward got tight and tighter as we trucked through the muck. And as the best fades are the toughest fades, the steady spate of "things are great!" offered ample pause for young Boo's cause.
With the nod to several notable exceptions, the general tone of earnings has been constructive. That, juxtaposed against the "heelsy" field position, would have jacked the market higher in periods past. The question now sittin' on the lips of the critters is whether the reflex rally is simply delayed or if something is seething under the surface. The answer will seem obvious with the benefit of hindsight but profitability, as always, lies along the path of our decision making process.
While enjoying a warm shower this morning, my venue of choice for deep thought, a question crept into my crowded keppe. What if investors have finally discerned the distinction between legitimate economic growth and debt-induced largesse? While the former has been a ghost in the haunted house of the post-bubble environment, the latter has the same "on the surface" appeal for end demand. The difference (debt load and the dollar road) has been a back-burner story and one that has been a constant source of ursine angst.
Have the seeds of stagflation finally been planted? They've been sowing in the 'Ville for quite some time and while I'm notoriously early (oy!), I can't say I'm shocked that the discussion is bearing fruit. That may or may not be impacting the price action (psychology is an intangible metric) but it does raise the ante for each economic input. And it goes without saying that by the time we see proof positive that the devil exists, the minxy discounting mechanism will already reflect it.
Turning our attention to today's fray, the world starts the session on the rare side (a bit pink). The combination of overseas lethargy, overhead resistance and overall anxiousness greets us as we ready for a new fray. Boo has been "two for Tuesday" the last coupla weeks and Hoofy desperately wants to avoid the hat trick. I opined yesterday that our furry friend has the con under triple-lindy resistance and while that might be a bit obvious, he'll bang the drum until the dancing bears lose their rhythm.
Good luck today.
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