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Santa Fray


Month end and thin holiday trading could make for strange bedfellows!


Good morning and welcome back from the adobe shack. After a nice lil' rest from the City of Critters, we power on up with a screen full of jitters. While my laptop was punk all weekend (it may have been a blessing in disguise but we've still got a summer intern for sale), I'm gonna fire up some morning vibes and play ketchup. I sincerely hope that you had a healthy, safe and enjoyable respite as we turn our attention to a short stack of summer sessions.

Gimme that green back!

There's been lotsa action in the dollar of late as a confluence of inputs comes to a head. With France becoming the second stalwart to raise a red flag (Germany has already screamed Achtung!), the Union De European is quickly losing sponsorship. Professor Zucchi has been discussing this dilemma for quite some time and while it may not be "today's business," the psychology of a failed EU is slowly creeping into the collective mindset.

It's hard to blame a country for wanting to take care of their own citizens (particularly when elections are involved). When the EU was conceived, the world was a much different place and a coordinated effort seemed to be an intuitive step towards a greater good. Now, as the long, hard road that is global growth unfolds and hints of isolationism litter the landscape, expect to see more wagons circle and a few sabers rattlin'. From a trading basis, and despite continued chatter that a frisky Gorilla has been actively unwinding his short dollar bet, DXY 88 is a level that warrants attention as we're now back in the area that spooked the Halloween goblins (when it broke a few levels of support).

Levels of Lore?

  • DJIA 10,400/10,600 (the right shoulder of some meaty two-headed reverse dandruff)
  • S&P 1192/1200
  • NDX 1550 (there now)
  • CYC 722/730 (50- and 200-day)
  • SOX 440-450 (multiple '04 and '05 support and resistance)
  • BKX 99.5 (the piggies remain stuck under their 200-day)
  • XBD 145ish (continued area of contention)

It should be noted that my morning jog through the sector set finds my stochastics uber-extended across the board. They're not snazzy timers (particularly in thin month-end tapes) but it should create some resistance for the up, up and away crowd.

Peering across our trading radar...

There are a few creeping catalysts in our midst. The most notable, of course, is Friday's breakfast with Beeks (when he's set to release the payroll report). Notable appetizers include this morning's Chicago PMI (exp. 61.8) and Consumer Confidence (exp. 96), the Novellus (NVLS) mid-quarter update (which should color the semis), tomorrow's I to the ISM (exp. 52.2) and the Lehman Brother's boot of General Motors (GM) from their widely followed credit index on Wednesday (following the recent debt dump from Fitch and S&P).

Nice Eyes...

"Investors have been conditioned by 17 months of a range-bound market to doubt the prospect of big, sudden moves. But that same range means it's considered crucial to try and catch a 4% bounce, such as the one we've seen over the last two weeks, which took so many short-term players by surprise." MiM2 Moderator Michael Santoli in Barron's who, to his credit, publicly anticipated the lift in his (must read) column a few weeks ago.


Lots going on in the hallowed halls as we edge into the fresh fray. First and foremost, incoming Managing Editor Kevin "Pepe" Depew is set to start tomorrow and we're excited to welcome him back to the family. We're also proud to announce the Kenny Goodreau, the founder of Knollwood Capital, has joined Minyanville and will lend his excellent technical eyes to our effort. Please join us in welcoming them both to the city of critters.

On the Minyans in the Mountains II front, we continue to welcome fresh and familiar faces to our Sundance of Finance festivus. Minyan Vanessa, who was toughing out a venue visit last week, was beside herself with excitement upon her return. "It's simply amazing," she gushed as she chewed through the various elements, "Ojai is a special, special place."

Yes, Vaness, it certainly is. And in less than three months, we're gonna have the mother of all Minyanfests in those very same Santa Barbara mountains. The critters can't wait!

Brass Tacks

After spending a few days in the sands of Sante Fe-and due to an unanticipated radio silence-I'm powering up this minxy pup with fresh eyes and an open mind. I will offer that I sensed a window of structural opportunity (a few weeks ago) when it looked like General Motors would skate by unscathed. That dynamic has since shifted and given our extended field position, the length of this lift (Mr. Saut's day count) and the compression in volatility, my purest takeaway is one of discipline. We could continue through Matador City but the easy trade-if there ever was one-is firmly behind us. Please tread carefully.

Good luck today.


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