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Hocus Focus


Only 23 days left until Minyans in the Mountains?


Sing with me, sing for the years
Sing for the laughter, sing for the tears
Sing with me, if it's just for today
Maybe tomorrow a good tape will take you away...


Good morning and welcome back to the minxy track. The bovine withstood a week in the rain and edged out some gains despite select pain. They handled the news from industry leaders and shrugged off the pain like veteren breeders. "They can't get 'em down" was the popular cry heard throughout the town of Red Dye, "the Matador Crowd absorbed the supply and they're starting to feel they won't be denied." Will Hoofy's strong shoulders carry the tape or can Boo and his crew now find an escape? A new week is here, stand up and let's go as we ready ourselves for a new critter show.

Chewing through the weekend news, the tenor of financial commentary seems to be a bit friendlier these days. Sure there was the requisite debate on China's recent revaluation, geared to appease the protectionist camp and quell the fears of stealth isolationism stirring under the surface. The gesture served to punctuate the fact that we're playing by their rules although the "give an inch and take the yard" token was embraced by those looking to put a nail in the Cassandra coffin.

While our trading eyes support higher prices still, the increasingly popular vernacular should further embolden the collective psychology and edge it towards a tipping point. It's impossible to ignore the ever-present fascination with stocks like Google, throwbacks from yesteryear that remind us of the way bubbles used to be. And while the bulls are quick to point to multi-year (all-time) highs in the small and mid-cap space, the context in which it's viewed (in absolute terms, rather than juxtaposed against a 25% decrease in the dollar since 2002) speaks to the selective rationalization that is prevelent throughout financial circles.

I've often opined that the journey is more important than our ultimate destination and that applies to the path of profitability as well. Therein lies our task at hand as we balance the big picture blues and ever-present compression with improving technicals, ample liquidity and the teflon sentiment. We could speak of lessons learned and since forgotten but the truth is that we're here to make hay while the sun shines. As long as we're conscious of the two-sided risks and position ourselves intelligently, we can take what the tape gives us while preserving capital and staying in the game.

Looking ahead to today's tape, the most impressive aspect of last week's freak was the ability of the bulls to hold important technical levels in the face of a litany of rubber bullets. BKX 100 remains an important tell in my universe as the financials are a key to any minxy vault. While I fully expect this complex to deflate (in terms of weighting in the S&P), the ability to establish leadership characteristics (after the broader market has flexed) would be a feather in the bovine cap. Ergo, if this sector begins to show signs of wear, the opposite--and a far more troubling--inference can be made.

We power up this frisky pup and ready ourselves for another avalanche of earnings. Indeed, of the 1000 or so companies set to speak, nearly 150 of them are in the S&P (30% of the index). Thus far, 72% of the companies that have reported have managed to beat the numbers despite some high profile misses. After four straight weeks of gains-and some eye-popping returns in select sectors (semis and biotech), the bulls now feast their eyes on the energy patch and economically sensitive situations. We all know that these reports will be snazzy-the question, of course, remains whether it's baked into the current cake.

Good luck today.

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