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A Relationship Business

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IF you have bullish inclinations, you can eyeball the initial support levels as a long side "stop"

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Good morning and welcome back to the flying time. Last night, at a small downtown venue, the "old school" gathered to honor John Brett, a gifted derivative salesman who began his career as a young floor broker. The return to my roots reminded me of a business long gone -- not in the conventional sense, but in a spiritual one. JB embodied everything that's right about Wall Street and his decision to hang up his cleats is truly the end of an era. Good luck, my friend, and on behalf of everybody you've selflessly helped throughout your distinguished time on the street, thank you!

The Minx sold off begrudgingly yesterday but, when it was all said and done, she managed to hold the first lines of support (S&P 920, NDX 1120). As discussed, the pervasive psychology is conditioned to buy the dip and that'll prove to be a self-fulfilling (bullish) element until, of course, it's not. I've spoken to a bunch of traders who are long and, when pressed why, they offered that "the tape just acts great!" The musical chairs will surely continue but when the music's over, Jim Worrisome, they'll turn out the lights.

The pre-market futes are being buoyed by some mildly bullish comments from Intel's (INTC:Nasdaq) President Paul Otellini, who opined that he sees a "slight" recovery in PCs. That, coupled with trendline support and a (thus far) firm dollar, has the hedge fund hot potato cooking extra early today. It's quiet on the catalyst front and, as such, the reactive active's will key off the price action. In other words, they walked into work today to find some green seeds and the harvest fantasies have already begun.

The financials told the tail yesterday and their brief breach of BKX 800 is a focus. If this all-important complex can't climb back over that hump, it'll weigh on the collective psyche. The retailers also warrant attention as they digest yesterday's retail sales data. Their initial relative strength emboldened the bull camp and the ability to ignore bad news is a constructive sign.

While I shuffled into work today with both legs in my metaphorical bear costume (50% conviction on the short side), my objective trading eyes respect (but don't defer to) the underlying tenor. Again, and while I view higher prices as an opportunity for Boo, we must remain aware of the Minxy "blow off" potential. Bullish (bearish) phases typically end with a bang (rather than a whimper) and exhaustive upside action is possible (although certainly not required). Stay sharp, please, and define your (two-sided) risk.

When will the bearish flies emerge through the ointment? As I said yesterday, when the market is much lower! That's when the media will get louder on deflation potential, a drifty dollar, soft IT spending, consumer debt, ect. In hindsight, it'll be obvious (or at least that's how they'll make you feel). Our goal is to remain proactive in our decision making process such that we're prepared if (when?) it happens but prosper if it doesn't.

In Minyanville news, I'd like to offer a free tee to the first Minyan who correctly identifies (in order) the top three responses to yesterday's poll. Send your emails to survey@minyanville.com. Also, please check out the Wall Street Journal's blurb (C-5) on the Ruby Peck Foundation all-star guitar. Casey and I are cooking up something special with this (triple top secret!) and it'll be the most spectacular effort we've put forth to date. What am I talking about? Ohh... you'll see!

Good luck today.




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