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Yo Yo Ma!


If (big if) the tape sneaks through to the downside, S&P 900-905 and NDX 1095ish are next support levels


Well the music's thunderin', restless and hot
You keep firin' me glances across the room
And I can't stop wonderin' just what you got
Get the feelin' I'm going to find out real soon

(Jerry Garcia)

Good morning and welcome back to the daydream, sunshine. With yesterday's crimson tide fresh in the minds of the curious critters, we enter today's session with a paw full of questions: Was that selloff the initial leg of the much discussed down/up/DOWN trading thesis? Will the complacent bulls continue to dip their wick until it doesn't stick? Can Boo's crew step it up and open a can of whoop ass on the brazen bulls? Who IS Greg Fokker, and does he really stalk college co-eds? The answers to all these questions (and more) are comin' your way, so get psyched, Minyans, a brand new day is upon us.

We often talk about technical analysis as a framework with which to trade, and regardless of whether it's a self-fulfilling phenomenon, levels do seem to matter. Last week, the much discussed S&P 950 (NDX 1160) zone beat down more advances than Jill at Martin's high school prom. Once the tape retreated to regroup, the trading focus shifted to potential support (which is past resistance). The first (marginal) level was butter to the hot Minxy knife but, at the end of the session, a more tangible zone (S&P 920, NDX 1115/1120) held tight.

Will that be enough to stem the tide and reverse course? In and of itself, it's not a HUGE support but it is something the bulls can point to if they choose to mount a rally attempt. The ursines will counter that the (steep) trendline off the March lows has been broken and, well, they'd be right. It comes down to perception and inventory (both ways) and which camp will win the color war as we edge through the thin and thinner holiday week.

What I'm balancing is the potential that the latest slippage is the first step in the down/up/DOWN trade vs. the reality that the long side is crowded and comfy. During the last two trading bottoms (October and March), I was reticent to dive in because I sensed final whooshage would clean out the knife-catchers (it never came). That's the mirror image anticipation of a final "blow off" rally in our current juncture, and the irony isn't lost on me.

When will "reality" matter? Timing has always been the key to successful trading and, by extension, "it" never matters until it does. The dollar, which has gotten creamed the last two months, is the lead story in the Journal today because stocks spilled. SARS, which was an "overreaction" during the rally, will inevitably be blamed for a soft tech sector (SARS is reportedly expected to decrease PC sales in China by 15% to 20%). Volatility measures and stochastics? They're antiquated metrics... until, of course, they work.

What's my inclination? I have clarity regarding my bearish big-picture view and, despite any potential rallies, it's one of the few things that is a "given," in my humble estimation. In the uber-near term, however, and with the looming holiday exacerbating the potential volatility, it's not as clear. As you know, I'm loading up the critters and driving up to Maine tomorrow for a much needed spiritual refocusing. I'm a big believer that when you're away from the market, you should be away from the market. With that said, and a pocket full of autumn puts not withstanding, I'll likely enjoy Memorial Day naked (sans the fur).

One of the greatest joys of this column is that, as Minyans, we have an interactive forum with which to share ideas. Let me proactively say my view hasn't changed but, at the same time, it's been a long time since my only risk was a bag of cookies. We've lived and breathed this market together for a long time and regardless of what happens in my absence, there will be no looking back. Balance, my friends, is SO very important.

On a personal note, I have to say that last night's preview of As Daylight Breaks was stunning. I've known Gareth and Jordana Holovach since we were in junior high and I'm honored to call them friends. Success has many forms, and they've achieved a wealth that most on Wall Street will never know exists. As Gareth so aptly opined, they're some of the luckiest people I know.

Good luck today.

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