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The Monday Minx


Trendlines, tan lines...what's the difference?


Good morning and welcome back to the sticks that stack. After three full days in the bright sunny haze, it's time to assign a new minxy gaze. "I'm all for a bronzy full body tan," said Daisy out loud as she wiggled her can, "but I think that I can speak for the clan when I say it's time that we map out a plan!" This diva she's smart, silk milk from the start, so let's take the path that'll set us apart. Come with me now as we shake off those jitters and figure it out with those Minyanville critters!

It's thin and quiet this seasonal summer but it's not for a lack of conversation. Almost anywhere you go, there's talk. Market talk. Political talk. Opinions. Suggestions. This is an interesting juncture in global happenings and it's manifesting itself in many different ways. In our minxy world, we must filter the noise and keep our poise if we hope to afford material toys. At the very least, we should make a concerted effort to identifying the evolving dynamic and ascertain which perception is indeed the reality.

Hoofy will argue that a wall of worry will cause the bears to scurry. Inflation? The de-facto proxy, oil, has edged back below the psychologically important $40/brl level and quelled, for now, the energy crunch. Earning's deceleration? This has been a benign confession season and that bodes well for continued validation on the fundamental front. Psychologically, the momentum has clearly shifted back to Matador City and cast a shadow of doubt on the ursine unhappiness. And structurally, credit markets can't sniff out a pout in spite of the doubt that continues to sprout for the bears so devout.

Across town where the critters all frown, a hope does remain that the bulls will soon drown. The specter of tighter money, they'll argue, isn't a pure reflection of long end rates. The stimuli is in the rear view, energy trends remain higher, and there's only so long that the printing press will avoid the mess. "The fundies are always worst at the bottom," Boo will point out to anyone who still listens, "and they will be sanguine near the top." He'll pause to let the emphasis sink in, "And with volatility (fear levels) at a multi-year low, I'll again pose the question--how long can the market rally if everyone and their sister is already positioned for it?"

Both critters make a valid point and we can fill in the blanks with a few observations of our own. Markets tend to rally after the first rate hike in a cycle--this we know--but we must also respect that the November electoral deadline will serve to facilitate two psychological evolvements. The government infighting will be vicious as both sides of the hill pull out all the political stops and, while we cannot quantify this, geopolitical risk will increase in kind. As Hoofy discussed above, this could very well be the toehold of a wall of worry but it may also represent a tradeable disconnect between what is and what's perceived to be.

There was some late Friday chatter by the jaws that bone (regarding the Fed's forward policy) and that's pressuring stateside future. Atlanta Fed President Jack Guynn offered (to nobody in particular) that the 'go slow' approach could be dusted if inflation ticks higher. "The word 'measured' is more of a plan than a pledge," he said. Clevland Fed Prez Pianalto, not to be left at the dance, warned that a failure to react quickly to the threat of inflation "puts our hard won credibility at risk." Uhh...

We power up this Monday pup to find Europe and Asia both draped in crimson (Hang Seng - 2.6%), the dollar index marginally higher (rate verbiage), the metals soft anew (watch silver $5.50 support) and traders looking to assign reason to the rhyme. Despite the (low volume) lift of the last few weeks, we (barely) remain mired in an '04 pattern of lower highs (downtrend). That is on the collective critter radar and will be the focus of the technical types this week.

Good luck today.


No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

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