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The Pep & Zepp


No overtrading!


Catch the wind, see us spin, sail away
Leave today, way up high in the sky
But the wind won't blow, you really shouldn't go
It only goes to show -- you will be mine by taking your time

(Led Zeppelin)

Ja know, my friends, I'll never bullshnitz you guys. Integrity is the hallmark of Minyanville and win, lose or draw, you'll always get a straight story. Longtime Minyans Michael Handel and Adam Darrow took a break from shaking their bones to ping me with their confusion. "Dude! We've been reading you since 2000 and you've never fallen into the conventional wisdom trap. What the heck are you doing trading with the same stop as everybody else?" If two stone groovin' Dead heads like that are confused, it's time for me to 'splain, Lucy.

First things first, allow me to state the obvious. I am a big-picture bear who believes we're in the EARLY innings of a multiyear malaise. I wouldn't be shocked to see the S&P with a four-handle on it in 2010, I believe the financials (and retailers) are teenagers in waiting and the toxic combination of debt and derivatives could (COULD) ultimately lead our country into a depression. There, I said it.

I've made a mistake, however, in the juxtaposition of my views. If the market trades in four frames (cycle, phase, trend, nuance), one's risk profile must mimic the time horizon. That's not always the easiest thing to communicate when addressing an audience as diverse as the Minyanship. I'm not rationalizing -- I was too bearish during this (countertrend) rally and didn't give Hoofy his due respect -- I'm simply trying to clarify the methodology.

The latest and greatest acne alerts (DIA, BKX) coupled with the manic momentum are bullish developments that must be acknowledged. While I believe they'll prove to be head fakes, the timing is what will ultimately determine our profitability. The downside warning signs are there -- they have been there -- and that's why I've left my leg in the bear costume despite the "eyes." The bull/bear, VIX, twisty stochastics all point to drastically lower prices. I'm simply trying to "balance" until I see the whites of their eyes -- at which point, I wanna unleash the hounds.

I hope this adds "some" color to what I've been thinking. S&P 955, while obvious, defines my upside risk and, if triggered, I'll usher the imagery back to the closet and take a fresh look. That midday try higher "felt" like a buncha bears went towel tossing but, as it stands, there's a bid underneath. A recipe for doing less? That's a question that only you can answer.

Abercrombie & Fitch (ANF:NYSE), Applied Materials (AMAT:Nasdaq), Computer Sciences Corporation (CSC:NYSE) and Network Appliance (NTAP:Nasdaq) (among others) report tonight while Federated Department Stores (FD:NYSE), Tiffany (TIF:NYSE) and Tenet Healthcare (THC:NYSE) (among others) will release earnings tomorrow morning. Beeks will also swing by for breakfast with retail sales (expected at .4%, excluding autos .2%) and whet our appetite for Thursday's economic barrage. With expiration looming, these numbers have the potential to put some zest in this pest so please factor that into your risk profile as we edge towards the close.

Finally, the rock and roll hall of fame ballots continue to pour in and despite Tommy Carden's assertions, the Dead does belong in this category. Tommy -- let's not forget that "listening to the music" seemingly saved your hide at the Meadowlands way back when! How soon we forget! If you haven't pinged with your top five, you've got two hours left. Choose wisely!

As always, I hope this finds you well.
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