Mounting the Hump
There's nothing wrong with a roll in ze hay!
Good morning and welcome back to the bovine snack. With yesterday's lift from the crimson abyss, the bulls are now giggling in a state of pure bliss. "They came at us hard on Monday for sure," said Hoofy feeling rather secure, "and I'm fairly sure that this jig will endure after holding the fort and blocking that door." Was the green upside fun a quick one and done or will Boo and his crew take the bears for a run? It's Hump Day again for all you big hitters so settle in now for a chat with the critters:
Boo: Man, the Russians really put the yuck in Yukos, eh? Their decision to ban them from selling oil may take 1.7 MM bpl off the market. Shocker that oil futes are near all-time highs!
Hoofy: And it's a shocker that you're finding fresh reasons for fur. You and I both know that obvious catalysts are often discounted by the forward looking mechanism that is the market.
Sammy: That's true, but higher input prices are an unwelcome development in an environment with decelerating earnings. The Fed has alluded that they want to let the economy stand on her own four feet. The recovery (sans stimuli) is already quite fragile and further straws could weigh down the camel.
Boo: Yeah mon, look at those durable goods--they're anything but! They came in this morning at .7% (-.6% less trannies) vs. expectations of 1.5% (1.1%). Forget the straw, Sammy, I'm going for the whole bale of hay!
Daisy: Weren't the same concerns floating around yesterday as levels were breaking and the sky was falling? Now, instead of triple bottom breaks, traders are chatting up the prospect of reverse dandruff and an upside rip. (turning to Hoofy and smiling) If that happens, the only hay we'll need is enough to take a roll in!
Boo: Shudder those udders, cowgirl, 'cause we're a long way from technical nirvana. Yesterday's lift was almost obligatory as traders are conditioned to buy certain levels. It's simply the self-fulfilling nature of technical analysis and wasn't confirmed by an uptick in volume.
Hoofy: The buyers are typically higher and will become emboldened when they think that the train is leaving the station. I'll be watching the semis for signs of traction in the face of (cough!) JP Morgan and UBS's downgrade. The brokers also bear watching as we tickle XBD 120 and the piggies will have to come to the market as well. Finally, and not to master the obvious, breadth, crude, the internets and biotechs (follow-through), cyclicals and the Russell will also be on my trading radar.
Daisy: Thanks Hoofy--now drink your milk so you're properly nourished for your big Hump today!
With that, Boo got up and walked out of the room. Debating the merits of market with his metaphorical friends was one thing, but listening to pillow talk in a public forum is entirely different. Sammy and Snapper followed the bear, discussing the prospects of a metal snapper, and noting the marginal traction this morning. Hoofy leaned over, planted one on Daisy's pouty puss, and made his way into the fray. There was, after all, a battle in his midst and the bull had to ready his brethren.
Good luck today.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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