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Critters Gone Wild!


Welcome back Toddo!


The Fourth of July. A time for barbeques, fireworks and family. And, for some, an opportunity to take a break from the shake and bake and enjoy the season in the sun. I opted to use the summer stretch to log a working vacation on the left coast. No guilt, I assured myself, as there was much to do and holiday weeks are typically snoozers in the land of flickering ticks.

I loaded up the critters and headed west to spend the long weekend with the Macke's. After a few days in Napa and countless memories of time well spent, we headed back to the Bay Area for some face time with ye faithful. After years of virtual conversation with friends I've never met, it was fantastic to shake hands and look into eyes. But, alas, as the gaggle passed and the sun set over San Fran, it was time to head south and focus on the task at hand.

After a few morning meetings in south central, I swung by LAX to pick up Winnie for the MiM2 site visit (there's evidently been covert conversation between Boo and his beauteous babe). And after a short glide in our convertible ride, the seven of us arrived in Ojai to map out the logistics for our upcoming retreat. We dove into details, kicked tires, vetted venues, scouted bands, tasted treats and generally set the stage for the August rage. While human capital remains the obvious appeal of this event, I can say with confidence that the "nooks and crannies" will allow for a massive upside surprise.

Of course, while I was roughing out the rigorous research, the world around us was anything but quiet. As we were again reminded of the difference between loss and loss, the bovine braced for further pain following a sloppy start to the week and news of the London bombings. The landscape was clearly ripe for a gripe-sentiment was lopsided, ranks were thin and volatilities were compressed. The only missing element, of course, was a catalyst to shake the tree. It arrived with furious anger but, despite the fright, the only thing shaking into the weekend were Boo's knees.

We can assign reason for the upside rhyme as the rally, in large part, was set-up by traders conditioned to buy into exogenous shocks. We witnessed this after 9/11 (albeit with a delayed reaction) and saw similar snappage after the Madrid tragedy. After an initial press lower on Thursday, the "can't get 'em down crowd" went to work and squeezed the tape higher into the weekend. If terrorist bombings couldn't dent 'em, the thinking went, a little thing like a labor report (which, to these humble eyes, was far from bullish) surely wouldn't matter just yet.

Hoofy, tanned and tone, is quick to note that an ability to shake off bad news is a sign of a strong tape. He's right, of course, and can finger all-time highs in the small-caps and mid-caps to prove his point. There's a fine line between respecting the action and deferring to it, however, and that's worthy of a mention as we power up for a fresh five. The collective psyche seems to embrace the idea that higher prices imply less risk. That's backwards, of course, but it'll fall on deaf ears until the ultimate arbiter (price) deems it problematic.

We power up this frisky pup with our four primary metrics vying for top billing on the trading totem pole. Psychology is delicately balanced between confidence and complacency as newfound bovine bravado abounds. The technicals are a tale of many sectors-there's the lofty (brokers, biotechs), the fence sitters (watch the piggies, trannies and DJIA as they tickle their 200-days) and the acne crowd (Russell and Mid-cap). The structural backdrop is balancing tightness in credit spreads with monolithic movement (asset allocation) and, lest we forget, the fundies will take center stage as we edge through earning's season.

With traders returning to their turrets, Dennis dissipating, Elmer on tap and emotions charged, we should see a fair amount of noise to start the trading week. As always, we'll be digesting the mess on the Buzz in real-time and will pick up the pace as we edge into the race. On a final housekeeping note, President Fish, General Fari, Doctor J and Herb Greenberg will be in Chicago this week for the Trader's Expo and we encourage our windy city Minyans to swing by (booth 246) for a hug and a handshake.

Good luck today!

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