May the schwartz be with you!
We used to play for silver
Now we play for life
One's for sport and one's for blood
At the point of a knife
Good morning and welcome to the warming. It's heating up nice in the city of critters as traders digest all the minxy stock jitters. "Everyone thought that Monday would sizzle," said Boo to his crew while holding a chisel, "but Hoofy's grip slipped on the crimson red drizzle and caused the applause to both falter and fizzle!" Can the bovine dig deep and rescue the sheep or will yesterday's slope prove stubbornly steep? It's wild, it's wacky, it's time for a thrill as we ready anew for a romp through the 'Ville!
With the Iraqi semantics behind us and an edgy Elmer in front, today is shaping up as a day of collective reflection. There's certainly a lot to chew on as we sharpen our number two's and ready for multiple choices. For instance, will the trickling reality of Wal-Mart (WMT:NYSE), General Motors (GM:NYSE), Target (TGT:NYSE) and Washington Mutual (WM:NYSE)--all below plan--plant seeds of doubt in the garden of Eden? We knew that the fundies were due to decelerate but I don't think anyone (outside of Red Dye) thought that it would happen this soon.
Let's forget for a moment that the next two sessions will dress more windows than Barney's. And, for the sake of argument, let's put the technical conundrum (looming acne vs. eye popping complacency) on the back burner. The question we need to ask is whether the Fed has the resources to keep the flattery afloat through the summer months and into the election. Most of the stimuli has either been depleted (or consumed by Barry Bonds) and while Elmer is a force to be reckoned with, it'll be interesting to see what happens when the jaw bone is no longer the hip bone.
The financials remain a focus and will likely hold the key to the vault. When you hear WaMu the killer whale say "expectations for a sustained increase in long-term interest rates will significantly impact the company's mortgage banking business," it's hard not to pay attention. Yes, the hikage is telegraphed. Yes, rates remain historically low. And yes, the trading community has "discounted" the next few moves. But with the financials having the highest weighting in the S&P--not to mention all of the de-facto financials--we must be careful not to stand too pat (particularly because that's become the popular stance in the marketplace). Please watch the double secret support at BKX 96 and the upside line in the sand that is BKX 98ish.
We power this morning pup to find Asia and Europe slightly pink, gold in a dogfight at the previous acne level (watch this!), the dollar getting a bit of green back and our stateside futes slightly higher. With quarter-end looming tomorrow, the handlebars will be gripped extra tight by the trading community who have to pen their quarterly missives tomorrow. Emotion is the enemy when trading, Minyans, so take a deep breadth and let's toss this Tuesday into the win column.
Good luck today.
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 firstname.lastname@example.org.
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