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Sheep's Meadow


Keep an eye on the brokers as "merger mania" proxies.


Good morning and welcome back to the sweltering shack. The mercury's jacked in the city of critters as rosy-cheeked traders shake off the jitters. The summer is here and questions abound so let's shake it up our own lightening round. While lazily perched on a Sheep's Meadow knoll, we gathered the crew and tickled our soul. The chatter went a bit like this:

Boo: So tell me Toddo, was Friday's dive a healthy pullback or the start of something serious?

Toddo: The bulls will argue that a little profit taking was par for the course on the heels of the recent ramp (and in front of a summer weekend). We won't know fer sure without the benefit of hindsight but the conditional elements that preceded the slippage-uber-extended averages, punk payrolls, looming resistance (see below), lopsided leans-remain in vain as we ready for a fresh five.

Hoofy: But what if this is structurally driven? The Horse has written about the potential for a massive offsides in the credit markets and gorillas may have gotten caught in that midst. If so, doesn't that trump technicals in the near-term?

Toddo: Potentially-we've seen alotta monolithic movements and that dynamic must be respected. It's worth noting that equities held firm early Friday until the bottom fell out of fixed income. The inter-market migrations must be monitored, particularly with Elmer chatting it up later today (to a China banking panel) and Thursday (in front of congress).

Snapper: Speaking of the asset class dance, didn't you recently opine that equities and the dollar would have a hard time rallying together? I see terrapins stationed in both places and they don't seem to mind the company.

Toddo: Yeah, that wasn't a particularly timely observation but I think it'll ultimately prove true. A confluence of factors is contributing to the duality of this move-the manifestation of EU aggravation, dollar-based asset accumulation and the aforementioned credit maze sit squarely at the epicenter. It's anything but easy to untangle this web as the spiders are constantly on the move.

Daisy: Moody spiders at that! What's your take on the collective sentiment? I've heard everything from "walls of worry" to "thin ice."

Toddo: The simple truth is that there is a ton of structural compression under the surface of a seemingly sanguine tape. 8000 hedge funds are chasing performance and many have increased their size to compensate for a lack of overall movement. That isn't a causation of volatility but it is an underlying fabric that exists whether folks choose to focus on it or not.

Do alotta people still question the upside? Absolutely--and for good reason. But it's worth remembering that psychology is an intangible metric and therefore impossible to quantify-particularly when everyone is trying to get into each other's keppe and fade conventional wisdom.

Sammy: The road keeps getting tougher, Toddo. What's a critter to do if they wanna better understand the frisky fray and make more informed financial decisions?

Toddo: Well, for those Minyans who have been (rightfully) focusing on the important stuff of late, the second annual Minyans in the Mountains retreat is coming up quick. This isn't your father's financial retreat-our Sundance of Finance exists for the purpose of building networks, featuring families and surrounding ourselves with people we trust and respect. As anyone who was in Crested Butte can tell ya, the purpose of the journey is paved with our peers.

We sat back in silence and absorbed the beauty that surrounded us. There was a time in life when my weekends were spent worrying about the week ahead but perspective is an acquired wisdom. As I watched the critters laugh and smile, I felt fortunate for the simple pleasures that I once took for granted. The flickering ticks would be there in the morning, I knew, and just like that...this moment will have already passed.

Good luck today.

* All charts courtesy of


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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

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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