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Beauty and the Beast


The first few hours will involve post-expiration posturing.


Did he doubt or did he try?
Answers aplenty in the bye and bye
Talk about your plenty, talk about your ills
One man gathers what another man spills

(Grateful Dead)

Good morning and welcome anew to the Minyanville Zoo. Last week's cruise offered precious few clues as to which way this tape will wake up from her snooze. "We zigged and we zagged but we ended up flat," said Boo to his crew of the critter combat, "but all of the braggin' and bullish chit chat is making me feel like this tape will go SPLAT!" Will the bovine all hurry up a new wall of worry or scatter about, run scared and then scurry? Get ready, my friends, for a rockin' new thrill as we ready ourselves for a stomp through the 'Ville!

They say that beauty is in the eye of the beholder and nowhere is that more true than the financial markets. If one man gathers what another man spills, the zero sum game must constantly balance the offsetting forces. There are no shortages of opinions either way--in fact, the longer we migrate sideways (as we have for the last few weeks), the more vociferous the opposing viewpoints become. The goal, as always--and the definition of profitability--arrives when we identify the disconnect between popular perception and absolute reality.

There's been a lot of chatter lately about the high put/call numbers, the inevitable pullback in crude (as a function of the Saudi spigot), pervasive fear and several other "historically compelling" situational technicals. They very well may be proven correct as the next few weeks offer little in the way of actionable catalysts (or liquidity) to stop a stampede. But let's take a step back for a moment and remember that euphoria persisted throughout the spirited sprint of 2003. At each and every respite, the bears could point to a plethora of potholes but that only served to step on the paws cause.

As we discussed last week, the structural (Carrie) and psychology metrics are the lead ingredients in our Minxy mix. A short step behind them are the technicals and while many measures point higher (see above), I would urge the Minyanship to take a gander at the geese. It seems to me as if all three majors are churning either at (or under) the March lows (S&P/Dow) or under the all-important 200-day moving average (NDX/Dow). That is subject to change but it warrants respect as we edge forward through the muck. And I will remind you, of course, that everyone and their pet poodle has "sell stops" set below that wacky Wednesday of a few weeks back.

We power up this Monday pup to find Europe dancing green (FTSE flattish), the dollar index slightly higher (grasping for traction above the 200-day), the metals pink on the inside (slightly red) and the stateside futes firm and firmer. Please remember there will be a post-expiration hangover (posturing) this morning before we settle into a truer tone and tighter tenor. Keep an eye on the breadth, and ear for the volume and a mouth full of humble pie.

Good luck today.


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