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The String Cheese Incident


We live in a market of stocks---not a stock market...


She's my yo-yo, I'm her string
Listen to the birds on the hot wire sing
Yeh-yeh yeh-yeh yeh-yeh yeh
Singing, "Thank you, for a real good time!"

(Grateful Dead)

Good morning and welcome back to the bipolar track. After a long, twisty, action packed week, we arrive at a special expiration edition of Freaky Friday. Four times a year, we have a confluence of earnings and options, a serendipity that puts traders and analysts on edge and in sync. The metrics are morphing fast and furious, from fundamentals to structural and technicals to psychology. We'll attempt to pull it all together, fitting the pieces together in a dynamic and ever-changing puzzle. Buckle those belts and roll up those sleeves, Minyans, as we look to put another week in our back pocket and some jingle in our front.

The aforementioned metrics have been jockeying for the top spot in our trading totem pole. With Boom Boom setting the structural tone, psychology shifting as a function of price, technical inflections overhead and fundamentals planning two-sided landmines, we find ourselves at a four-way intersection. Aggregate earnings have failed to bail out the hopeful bovine but, alas, a handful of doves swooped in on Wednesday to plant seeds of upside redemption. And as those thoughts sow in the mindset of the masses, Hoofy can only hope that the market, as a forward looking mechanism, has already priced in the uptick in risk and the downtick in risk tolerance.

After the sharp Hump Day rally, the Matador Crowd had a clear agenda yesterday--to take our S&P 1264 and trigger another round of technical buying (in the context of negative gamma, no less). We spoke of their mission and watched our tea leaves closely, offering that the longer it took to rally the troops, the more likely it would be that they turned tail and set sail. The internals never gave Hoofy the wink and, by the time we rang the closing bell, the damage was pervasive. The Russell gave back its entire move, the trannies were down an eye-popping 4% and energy and metals, on the heels of Wednesday's eyes, were taken out back and shot.

Overnight, the news was mixed as earnings and overseas elbowed for attention. We had incremental positives in the form of Google and Microsoft and, this morning, another blow to tech in the form of Dell. The fact that mainstream media remains so "tech-centric" in their coverage is partially to blame for the old guard having such a tough time of it. The four horsemen--Intel, Dell, Microsoft and Cisco--are poster children of tapes gone by, over-owned in the fund community and rife with supply all the way up. That doesn't mean they can't rally, mind you, but NDX 1510 looks like a level of love for bovine so sore.

That's one of the reasons I've been looking towards energy and metals as relative winners in the new world. It's been a profitable thought over the last few years but it's being put to the test of late. While I have some metals stuffed away for a shiny day, I recently moved to the sidelines (in the commodity stocks) on the trading side of my pad. We live in a market of stocks---not a stock market--so I can't help but have my right hand up. I've found over the course of my career that when I can't find stocks to buy, one of two things is afoot. Either I'm dead wrong (happens to the best of us) or there's another leg lower waiting in the wings.

We'll pick this discussion up on the Buzz as I've gotta few pre-opening mind melds to attend. With T-minus 20 days until Minyans in the Mountains III, we're up to our eyes in the devil that are the details. Please know that if you call the Vail Cascade, they'll tell you that they're SOLD OUT but we have one or two rooms "in house" for those interested. From there, we've made arrangements with neighboring hotels to ensure that interested Minyans will be able to join us. And--keeping with the MIM theme--we're proud and pleased to announce that Stephanie Pomboy of MacroMavens will be joining us as part of our Macro Panel. Engine room, more steam!

Good luck today.


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