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The Cat's Meow


Who's your daddy?


Did you ever waken to the sound
Of street cats makin' love
And guess from their cries
You were listenin' to a fight?

(Grateful Dead)

The straddle battle continues as Hoofy and Boo tetherball around our big support levels. The bodacious bovine have had (thus far) staved off the ursine uglies and that's spurred a round of short covering. There sure are a lot of crosscurrents--the banks are buoyant, the semis are sluggish, bonds are all over the place and the breadth is noncommittal. Hey Fokker...this might be the perfect environment for Italian ices!

The clearest theme of the day is the S's over N's dichotomy. The financials have outperformed all day and, as they're the S&P pace car, that's allowed for a firmer tone in the old school. Across the fence, eBay (EBAY:NASD), KLA Tencor (KLAC:NASD) and the rest of the four-letter freaks continue to offer cause for paws. There's clearly supply out there--the question is whether the pressers will head for the hills if there aren't any spills.

There's a smattering of earnings next week but, for the most part, the meat of the lineup is behind us. That will allow investors to digest the recent inputs and position themselves accordingly. The variables in play? These technical levels (perception is reality), the famed second half recovery (economic validation) and the thin summer sessions (volatility exacerbation).

Speaking of which, today's gaunt tape is making for some whippy action and I'm seeing traders "gunning for stops" in the futures pit. The brass ring is still up for grabs, my friends, and regardless of the outcome, there will be ample reason assigned to the rhyme. Respect (don't defer to) the price action, remove emotion, define your risk and take it one step at a time.

As always, I hope this finds you well.

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