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Slick Willy


I don't think I can shoulder another spike in crude...


Good morning and welcome back to slippery track. Yesterday's ride left the ursine tongue tied as the flickering ticks sidestepped a slide. "Oil was black and stocks were all blue" said Boo to his crew at the Minyanville Zoo, "but just when it looked like the tape was all through, the bulls reappeared and bid 'em anew!" Is this a new brick in the tall wall of worry that causes the bears to scatter and scurry? Or should Hoofy run and escape in a hurry before being fried by the critters so furry? It's Hump Day again so just sit back and chill as we ready ourselves for a romp through the 'Ville!

It's gotta be real quiet in Red Dye Junction these days. Think about it--the single biggest macro variable that could derail the economy has an 'outlier' day and the bulls yawn across the board. The 'hands over eyes' analysis is that the ability of a market to brush off bad news is a sign of a strong tape. That's what portfolio managers were thinking last night and the psychology steroid could usher a newfound bravado into Matador City. What remains to be seen is whether that steady cadence in the background is the sound of bulls lining up at the door or the deliberate ticking of a financial time bomb.

Volume continues to be the great unknown as investors have seemingly clammed up. It was a talking point for the bears as some asserted that the recent rally was snuck in during the quiet holiday week. What we found yesterday was that the sell side was equally anemic and lackluster in pursuit. That paints a seasonal pattern and removes this input from our educational analysis. The talented Mr. Tuttle is doing a fine job of illustrating our field position and crowd size as the wave sweeps across the stadium. 2004 has been a heckuva game thus far but until proven otherwise--and this is important--the bears (while starting the month on defense) are maintaining a slight technical edge as a function of the lower highs across the board.

There are alotta things to look at these days other than your bottom line. Sound risk analysis dictates that we allow for all probabilities of outcome regardless of our market view. The recent action has been encouraging and it could portend further price gains. At the same time, however, this could be a corrective bounce in an evolving landscape that continues to worsen. Our task at hand is to define a time horizon and risk profile (unique to all of us) and then position ourselves to prosper if we're "right" but survive if we err. And this approach applies to each and every critter in the village.

We power up this saucy pup to find the critters swimming in the green seas as a function of yesterday's stubborn stickiness. With Intel (INTC:NASD) galloping into the 'Ville tomorrow (night) and Beeks arriving Friday (he travels by train), today's tape will be about perception and posturing. Our mainstay tells remain in play as they ain't broke so there's no need to fix 'em (yet). Citigroup (C:NYSE) and BKX 98 (resistance), the semis (SOX 485 is the 200-day), small caps (liquidity), cyclicals, breadth and crude should be on all our radars regardless of what's on our sheets.

Good luck today.


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