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On Sports and Trading Mojo



Last night's NBA Championship Game contained a scenario seen, in various forms, throughout sports, life and even markets.

The San Antonio Spurs started with high expectations and promptly face-planted, barely staying in the game while Detroit built a nearly insurmountable lead. Then, down 10 pts after 3 quarters, the Spurs looked into the abyss and found some heart. They clawed their way back to a deficit of just one point at 87-86 with 2:22 left in the game.

One point down, playing at home with the Championship right-there in front of them. On paper, it looked great for the Spurs. In reality, for reasons worthy of an entire course-load worth of psych text-books, San Antonio never had a real chance. They had spent their collective Mojo for the night getting back to nearly even and had nothing left to get the win.

Having gotten so close to the lead then failing to capture it left the Spurs drained. They had plenty of chances but it was as though a mental man-hole cover had been placed over the basket. Superstar Tim Duncan not only couldn't rally San Antonio, he was obviously part of the problem, missing two shots in the last minute. Had Detroit-native Madonna been in attendance she would have dunked Eva Langoria in a trash bin.

The Spurs didn't score another point in the last 2:22, losing the game by a final of 95-86.

What does this have to do with the markets? Maybe nothing... maybe quite a bit. Check the YTD graphs on the three majors, the Dow, the NASDAQ and the SPX. All of 'em came into 2005 with great expectations and face-planted. By May the tape was looking into the abyss with all three down about the equivalent of 10 pts in an NBA game (read: a lot but not insurmountable, in theory).

From there, with the tape looking into the abyss, the comeback began, clawing all the way back to just under even on the Dow and Nazz, slightly BETTER than even on the SPX:

We've had plenty of excuses to break through to solid green in the time the tape has spent idling just under even for the year. We've had decent (not great) data. The tape's equivalents to Tim Duncan (say, Intel (INTC), or the retailers of late) have worked hard but can't seem break entirely through to carry the tape to a strong lead after the deficit created by the breakdowns of March and May.

Just as in sports, the bandwagon can be assumed to exist higher. If we can break higher after what Prof. Roney noted has been the longest stretch of sub-1% movement days in the S&P in nine years, the chasing will begin. "I never had a doubt in this rally" traders will fib, mentally allowing them to buy Electronic Arts (ERTS) at 70 after missing the move from 50 to 60. The pom-poms will be bopping and it'll be impossible to find anyone who doesn't claim to have "seen it coming".

Then again... a whole bunch of energy and money has been spent getting the markets back to flat for 2005. We've had plenty of chances to get over the top and haven't been able to thus far.

Is it really so crazy to think that a failure here will leave Hoofy's stable as empty as San Antonio's arena in the final moments of last night's game? If the Boo bears are to retake control, "right about now" would figure to be the point at which he puts the ball-gag in Hoofy's mouth, in terms of price levels, anyway.

You think writers are dissing Tim Duncan? Wait until you see fund managers getting out of stuff like General Motors (GM) if it starts unwinding the Kirkorian rally.

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No positions in stocks mentioned.

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