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A Winning Shot


Remember, Minyans, the goal is to be in a position to use prices to your advantage.


It was a tremendously successful weekend for the green team and they'll take the court today with hopes of winning it all. Yes, I could be talking about Freshman Carmello Anthony and the rest of the young Syracuse hoops squad as they prepare for the Championship game tonight. I was, however, talking about Hoofy's heroics as he marches higher in pre-market trade. The gap higher surely seems obvious now but, without risk, there would be no way to reap the reward.

Our business is unique in that it offers immediate validation for our decision making process. Through it all, we must adhere to the disciplined mechanics that got us to this point. When we craft a lucid and intelligent market thesis, we base those decisions on what we know and feel at the time. Although we've discussed the rally potential of this tape, I've chosen to approach this Minx with my right hand up. That may seem too conservative with the futures up appreciably, but it was consistent with my chosen style and there's no looking back.

We power up our systems this morning with the S&P and BKX poised to burst through their 200-day moving averages on the upside. They've done this before, mind you, and proved to be "false breakouts" (seen only with the benefit of hindsight). While it's entirely too early to tell if this will follow the same script (I believe it eventually will), we must respect the influence this will have on the collective psychology. Watch S&P 895 as the first "previous high" and then S&P 920-930 as a more important resistance. For the techs, NDX 1100-1125 remains an area of upside contention.

In company specific news, Alcoa (AA:NYSE) reported a solid report late Friday while Siebel Systems (SEBL:Nasdaq) snuck out a preannouncement. This morning, Morgan Stanley upgraded AOL (AOL:NYSE), Dain punted Qualcomm (QCOM:Nasdaq), Goldman upped numbers for Yahoo! (YHOO:Nasdaq), JP Morgan downed MapInfo (MAPS:Nasdaq), Read-Rite (RDRT:Nasdaq), AMN Healthcare Services (AHS:NYSE), Medical Staffing Network Holdings (MRN:NYSE), Maxtor (MXO:NYSE) and Western Digital (WDC:NYSE), CS First Boston kicked KB Home (KBH:NYSE) while upping Questar (STR:NYSE) and M.D.C. Holdings (MDC:NYSE) and Monty raised numbers on Home Depot (HD:NYSE).

Tells today will include the dollar (up nicely), crude (spilling), gold (lost some luster), bonds (slippy), financials (including brokers), retail, semis, breadth and our levels. It's worth noting that the stochastics I monitor are more extended in S-land (particularly the brokers) than they are in their four-letter cousins.

I enter today's mix with one leg in my metaphorical bear costume, a handful of May puts on my sheets and some gamma in my risk profile. As it stands, I respect the ability for this to continue but will be looking to use this strength to scale into further defined-risk downside exposure. I understand that many Minyans don't share my stylistic approach but, as always, I'll share my process with hopes that it adds to yours.

We've got a big week ahead of us, my friends, so please take a couple of deep breaths as we prepare to edge into the muck. Emotional decisions almost always come back to haunt you so remain lucid and think positive -- it's gonna be a kick ass week for us. It all starts within.

See you after the opening.
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