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Dancing Between the Elephants


The Iron Horse?


You can't start a fire
You can't start a fire without a spark
This gun's for hire
Even if we're just dancing in the dark

(Bruce Springsteen)

Good morning and welcome to the Hump. Yesterday's save was a rare bovine wave that rewarded the bulls that dared to be brave. "The pressers were guessing it would be a mess," said Hoofy the bull as he fought through the stress, "but with all the bets and the Q-put excess, the Minx set the stage for a green team success!" Will our hero sidestep the meltage anew or fall in the paws of the crafty bear Boo? It's a new day of pitches so get ready, you hitters, and let's go to work as we dig with the critters!

Team Chambo pulled back the Cisco curtain (CSCO:NASD) yesterday to reveal (yawn) cautious optimism and slightly better results. While his tone was considered to be a relative uptick by some, you'll have to forgive the bears if they choose to view the "show me recovery" from an aisle seat (near the door). It wasn't 'bad,' per se--he was constructive on the global I.T. recovery--but as the Cisco kid never saw the glass half empty, a fragile feeling remains among investors.

With that bogie out of the way, we can again turn our focus to the structural driver that is shifting the minxy gears. I was having a (soft) drink with a pal last night and opined to him that Latin America = silver = soy beans = the German Dax = bonds. Perhaps that's overly simplistic but I think you get the point. Carrie flooded the world with liquidity and the rising tide lifted all asset classes (Noah made a killing!). The availability for further fluidity will determine if this was a simple (dare I say healthy) pullback or a more ominous (and very spooky) precursor.

There are a ton of opinions out there and some will be proven correct while others will be made to feel foolish. I have a fairly strong belief that the juggle struggle will ultimately unravel but, again, there is a timing component involved. As such, I'm keeping those grizzly hairs on the back of my neck as I dig into the batter's box each session. And I will do my best to offer insight on the daily dance that ultimately defines the journey.

I saw a ton of QQQ put buying yesterday and that usually means that the downside will be buffered a bit (in the uber-near term). Why? Unless that was a pure "throwaway" hedge, that exposure will have to be covered at a point. That's the mechanical explanation. The thornier reasoning dictates that the Minx likes to travel the path of maximum frustration and she won't melt when folks are set up (or are calling for a "crash").

There are certainly cause for paws--oil is a spoiler, the geopolitical landscape is nightmarish and the world remains complacent regarding the prospects for the grizzly anew. That will ultimately matter--I think--but there are reasons to believe that an upside test precedes the deed. In addition to the looming stochastic buy signals and the ability of the majors to hold their 200-day moving averages (so far), Professor Reynolds all but calls Boo out this morning. And if I've learned anything over the years, it's to pay close attention to what the Iron Horse has to say.

Good luck today.

position in silver, qqq

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

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