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Who's Zoomin' Who?


I love the smell of burnt fur in the morning!


Well the kids don't eat
And the dog can't sleep
There's no escape from the music
In the whole damn street

(The Who)

Spring is in the air (and in the tape) as we power up our systems and prepare for another day at the races. You can almost see the anxiety in the futures as they flicker and flutter through the early morning hours. It's as if equities are inversely correlated to the proximity of coalition forces to Baghdad and the closer they get, the higher we go. I'll tell you one thing -- they didn't teach war in Trading 101!

I outlined the trading metrics in my opening piece and while I think they're pretty self-explanatory, I want to quickly make a point. I would much prefer to see a bull market emerge, peace exist and love conquer all. There are no true winners in a multiyear grizzly and it promises to be a long, hard and stressful road.

My concerns aren't new, however, and I've been communicating them long before terror reared it's ugly face. Excess breeds excess, my friends, and I simply wanted to make the distinction between hope and faith when it comes to your financial decisions. Thassall.

With that said, my trading hat dictates that I focus on our journey rather than the ultimate destination. There's no denying that the bulls have confidence now and after three years of painful embarrassment, they're not gonna pull any punches if given the chance. The psychological and structural metrics continue to drive this market and despite horrid economics, fugly fundamentals and geopolitical risk, they're eyeing breakouts. Zany!

Our daily guides remain the same -- the dollar, crude, bonds, breadth, financials, semis, retailers, levels --and the onus is on us to manage our own emotions. As you know, I'm currently trading gamma with a short-side bias (one leg in the fur) and my inclination is to remain that way as long as the trend is down. All the while, I'm scanning for extended big cap names (to buy "underneath" puts), looking for "situational" opportunities and monitoring the technical levels which are quickly approaching.

Will reality set in and dump this tape or is the market "telling" us, as a leading indicator, that brighter skies await? It remains my opinion that further downside is a function of "when" rather than "if" but I also know that this will continue until it doesn't. I've learned through the years never to try and rationalize the irrational -- whether it's price action or people -- so I'll humbly walk the path as we find our way.

One step at a time.

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