By Todd Harrison Jul 21, 2003 3:14 pm
Fare ye well.
Wonder this time if she's gone
Wonder if she's gone to stay
Ain't no sunshine when she's gone
And this house just aint no home
Anytime she goes away
The slip and drip continues as the afternoon edges along and I wanted to quickly check in with my fellow Minyans. There are a mound of crosscurrents out there today, not the least of which is the fixed income market. As of this post, the 30 year is down two full points. In the immortal words of Tommy Callahan, "That's gonna leave a mark!"
In all seriousness, the carnage in bonds (and the subsequent back up in yields) is a structural shift that needs to be respected. Brian Reynolds, who's nailed the bond-to-stock trade, maintains that yields have yet to reach levels necessary to predicate another shifty switch (back to bonds). He knows the inter-market dynamic better than I do--and I respect him tremendously--but I gotta think the fixed income blood bath has equity implications. Either way, keep it on your radar as we trudge ahead. If the meltage continues, you can bet that strategists will be looking to place blame.
On a brighter note, the industrials ARE acting dry amidst the carnage. Looked at another way, 3M (MMM:NYSE) is adding over 40 Dow points with it's six point jig. There's been a clear rotation into the Caterpillars (CAT:NYSE), and United Technologies (UTX:NYSE) of the world lately we're seeing more of the same today. It's one of only a handful of dry patches (biotech, internets being the others) but it warrants a mention nonetheless.
Altera (ALTR:NASD), Novellus (NVLS:NASD) and Texas Instruments (TXN:NYSE) highlight tonight's parade and a host of earnings will be released before tomorrow's opening. While the fundies are the focus, it's important to remember that 1) they're only one of four metrics and 2) the recent rally has discounted a fundamental bounce. In other words, weigh your trading ingredients carefully before implementing a strategic recipe. The last thing you want is equity indigestion.
What do I think? I continue to be in the "they should be lower but Elmer has beer muscles" camp. I've been trading 'em that way and staying uber-tight with my risk. All the while, I'm closely monitoring the technical picture for signs of breakage and/or deterioration. I will say this: the S&P has quietly put in a series of lower highs and lower lows. If that doesn't reverse itself (quickly), there's gonna be a lotta bulls trapped in a bottle neck.
I've gotta jump and juggle. I sincerely hope that you're all having a fine day and, if not, that you've got the balance to keep it in perspective. Work to live, don't live to work, and never let the stressful steps rule your life. Time, as Ruby used to say, is the most precious of all commodities.
Have a peaceful night.
position in utx, spx
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