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Tuesday's with Elmer


Perception is reality!

The wheel is turning and you can't slow down
You can't let go and you can't hold on
You can't go back and you can't stand still
If the thunder don't get you then the lightning will

(Grateful Dead)

Good morning and welcome back to the minxy snack. We left last week's freak with upside improvement although we have seen more motion than movement. Tensions are high in the race for return as we edge our way through this most recent churn. "We're up then we're down, it's not even funny," said Sammy the snake to Lester the bunny, "I long for the days when it was still sunny and we could survive by printing more money!" Will the optimist crowd make Elmer so proud and search for the sun through stagflation clouds? It's all in your minds, so let's think it through and ready ourselves for the Minyanville Zoo!

It's hard to assign a winner to last week's tetherball brawl as Hoofy and Boo took turns with the serve. There were times when both critters looked ready to deliver the knock-out punch but, when the dust settled and they looked up at the scoreboard, the final tally was a virtual dead heat. As a function of this classic churn, and when coupled with the overhead resistance, we remain entrenched in a technical set-up that favors the bears. The caveat, as is often the case with this particular metric, is that we'll only know if it works after the ultimate arbiter (price) weighs in.

I spoke to a slew of respected professionals over the weekend and I was struck by a unanimous perspective. It seems that they are preparing for a more dovish Fed on Tuesday and sense a sharp rally looming in the S&P. While they view this lift as a transitory gift, the seed has been planted in the circle of trust. That psychology, and whether it can sow in the mindset of the masses, will likely dictate the near-term fate. Perception is reality in the Street and we remain betwixt by the two, torn between what most think and what inevitably looms on the horizon. Pockets of profitability are nestled along that path and therein lies our task at hand.

I got caught flat-footed on Friday as Snapper snuck into the mix and flexed his chest. His mojo and moxie lifted us to the underbelly of the first goal of Hoofy's hat trick (S&P 1163). The concern I have for the bodacious bovine is the mess of stress that waits above. The battle lines sit like jam in a layer cake, crimson jelly that makes a sustainable rally a sticky situation. When we view this in the context of sluggish growth, massive debt, higher rates, the housing bubble and overexposed investors, it starts to read like Shakespeare as we wearily watch the writing on the wall.

Alas, the big picture is made up of alotta little pictures and this week is shaping up to be an Emmy Award winner. We've got earnings season on one channel, economic assumptions on the other and some pretty powerful cameos nestled among the noise. It's safe to say that I respect the upside but expect a very difficult and frustrating financial path for us all. Bear markets don't mean that we travel due south--that would be too easy--it's a long and arduous process that weeds its way through the professional pyramid. Discipline, along with a proper juxtaposition of risk and time horizon, remains integral to a profitable process.

We power up this Monday pup to find the world wearing some rose-colored shades. Europe is up a percent across the board, crude has slipped (lower) through $50/brl and our stateside futes are hinting towards Matador City. In addition to the loaded catalyst calendar, today will also usher in the beginning of Reg SHO (which removes some restrictions for short-sellers). Keep your wits about you, Minyans, and understand that we'll likely see alotta posturing ahead of tomorrow's pow-wow.

Good luck today.

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No positions in stocks mentioned.

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

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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