By Todd Harrison Jul 20, 2005 8:46 am
Look at me, I'm A.D.D!
Don't be angry, don't be sad,
Don't sit crying over good times you had.
There's a Minx, right next to you
And she's just waiting for something to do.
(Crosby, Stills, Nash & Young)
Good morning and welcome back to the eye of the storm. It's hot as can be in the city of critters as traders dig in and shake off the jitters. The news is white hot as it flies off the presses and dictates the pace of trading successes. "I used to believe I was A.D.D" said Boo to his crew while down on one knee, "but there are so many earnings to see, I'm really beginning to think it's not me!" Can the frazzled bears claim their musical chairs or is Boo holding on to a wing and a prayer? We'll know soon enough as we ready to jump and dig in our heels for a hike up the Hump!
Alrightee then, did someone say that they were bored? With the summer doldrums a seemingly distant memory, we find ourselves stuck in a slew of new muck. Earnings are coming out fast and furious, led by Intel's gross margins and Yahoo's gross reaction to last night's report. Those tech bellwethers have pulled back the crimson curtain and paved the way for this morning's avalanche of information. Yes, there's a lot going on Minyans, so please take a deep breath before you dive into the jive.
As a function of the recent rally, the lopsided lean picked up some steam. Ever since the London terror failed to flip the Matador skip, bovine bravado has become prevalent in trading circles. Hoofy will argue that it's for good reason and, with many mainstay sectors a kitten's whisker from multi-year highs, it's hard to argue with the big fella. Still, as the age old axiom echoes in the backs of our brains, one has to wonder if we bought the (strong earnings) rumor simply to sell the news.
Last night, while dining with a good pal who manages ten figure size, we talked tape and discussed dynamics. He's a pretty sharp cookie, this fella, and offered some nice nuggets of information. First, with regard to the tape, he's of the view that the small and mid-cap names will outperform their large cap brethren for years to come. "People are trapped in the nifty fifty," he opined, "and that complex remains too crowded for my blood." His stylistic approach isn't for everyone, I know, but he's also looking to buy value and short beta into the back half of the year.
On a more opaque level, he mentioned that the first lesson he learned when he started in this business was "never short a chart you can't ski." Yeah, it took me a minute to visualize that but there is some truth to his musings. "Catching cusps" can be a dangerous game as the meat of the move often occurs after a top (bottom) has been put in. This is particularly important in momentum driven environments and why we constantly remind active Minyans to define their risk.
Turning our attention back to the maelstrom of minxy musings, the confluence of information should make for a hectic Hump. Intel, Yahoo!, Amgen, JP Morgan, General Motors, Pfizer and a slew of industrials will all vie for investor attention as we try to fit the pieces together. To add spice to the mix, Elmer will step to the hill for the first act of his beltway swan song. His verbiage-and the perception of such-will likely add monolithic movement to a tape that already has alotta moving parts.
We're jammy and slammy as we juggle the struggle so please lemme hop back to the Buzz. Keep an eye on our sector tells, market internals, a litany of levels (BKX 100, S&P 1228) and thyself. If you're not seeing it, have the patience to wait for your pitch and the discipline to know that it'll eventually come. Nobody said it was gonna be easy but, alas, if there wasn't risk, it would be called winning-not trading.
Good luck today.
No positions in stocks mentioned.
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