Discipline will dicate the path of profitablity.
Let it go..
Good morning and welcome back to the holiday track. Summer is knocking on the front door as the Minxy routine is ready to roar. With bears to the left and the bulls on the right, the critters are amped to fight the good fight. "Friday's soft chop is out of the way," said Hoofy the bull of the most recent fray, "the bears are now scared and in disarray as we ready to shape the flickering clay." Will the bovine regime recapture their dream or can Boo and his crew regain self-esteem? Toss down some fresh joe and sharpen your skills as we ready to roll through a week in the 'Ville!
The Matador Crowd is feeling mighty fine after their impressive gains of late. It's hard to blame them for their moxie--bad news hasn't mattered, good news has been embraced and--perhaps most importantly--no news has been perceived positively. That's a far cry from a few weeks ago when the hedge fund hot potato had seemingly been mashed. There is still blood on the street--this I know--but the lack of contagion (coupled with improvement in the credit backdrop) has silenced the lambs for the time being.
In an effort to share the eyes--and before I touch on a few housekeeping items--I felt it might be helpful take a quick walk through our primary metrics. Minyans have inquired about the "priority" of the legs under the trading table so I'll list them in order of perceived importance. If you happened to miss Friday's content (News & Views and the Buzz), I encourage you to circle back when you find the time. It was, in my estimation, one of the more enlightening days in the City of Critters.
- Structural: As with any metric, the structural influences can be viewed in multiple time horizons. In the near-term, we should start to see a truer read of the underlying supply/demand with expiration influences out of the way. The more critical aspect, however, is on the "financial fabric" front. With Thursday's "stay of execution" from Fitch to Ford, the auto debt dilemma may have shifted to the back burner. This dynamic--and the resulting chain reaction--will act as a monolithic mover for equities in general.
- Psychology: Perception is reality--particularly in holiday thinned weeks. The fear of missing has again replaced the fear of losing and that can either build or spill. With the major averages in the middle of a long-standing range, there doesn't seem to be a disconnect on either side of this equation. I will simply draw your attention to the low volatility levels. While they can certainly fall from current levels (into the summer doldrums), they speak to both compression and complacency.
- Technicals: Hoofy breathed a deep sigh of relief when he managed to mount the previous perfect storm (DJIA 10,400, S&P 1180, NDX 1500). He wanted strong internals (got it) and volume confirmation (nope) but is trying to rationalize the latter as he's apt to do. Still, and while the tone and tenor are much improved, we must keep an eye on the stealth trendlines that are pointing to an ursine flank. With NASDAQ stochastics twisting (toppy) and lotsa pure technicians stopped out, the devil that are these details may have already convinced the world that they don't exist.
- Fundamentals: Earnings season is behind us and the fundies are no longer a focus for most folks. It was fairly uneventful from where I stand and a near-term case can be made for both camps. Ultimately, I still subscribe to the "excess breeds excess" argument and sense that the eye-popping multiples of years past will surprise on the other side. That contraction, when it occurs, will likely lead to the out-performance of "value" relative to "growth" stocks.
Other cookie crumbs to start the week:
- There's been alotta resistance to the notion that a real-estate bubble is brewing. It's a natural reaction given the vested interest but we've seen this rationalization before. Bubble us once, shame on you. Bubble us twice, shame on us...
- Where are we on that "curve?" Mania almost always lasts longer than most deem realistic. That makes profiting from this dynamic elusive and potentially dangerous.
- Keep an eye on the multinationals as a proxy for isolationism. It's not un-American to acknowledge the fact that the USA is becoming increasing unpopular around the world.
- We've been conditioned to believe that tech and financials are the leaders on the street. That may be true but my sense is that it won't be in the direction that most anticipate.
- Chatter was making the rounds last week that Warren Buffett was unwinding his dollar short (lending to the grabby greenback). I have no edge-or interest-in gaming invisible catalysts.
- I'm always early. Is it therefore that surprising that Afleet Alex took the Preakness (and not the Belmont)?
- The next two weeks promise to be thin and whippy as traders cast an eye towards the important stuff. That'll make our tea leaves all the more important in helping us navigate the flickering ticks.
- Please keep an eye out for information regarding the Minyans in the Mountains II seminar. President Fish is finalizing the details this morning and the doors should open later today or tomorrow.
- We'll be making an announcement on the home front in the next few days as Minyanville officially welcomes a new Managing editor.
- After a full weekend of logistic planning, we'll be moving the last of our systems to the new MVHQ digs later this afternoon. We don't anticipate any glitches but it can't hurt to communicate the process.
- In an effort to balance (and be a good son), I'll be spending Memorial Day visiting my mother in Santa Fe. I plan on scribing vibes Thursday morning and will then head west (young man) for some spiritual rebalancing.
Good luck today, Minyans, and enjoy your journey!
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