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Monday Morning Quarterback


Buckle up Minyans, this ride is about to get interesting and interestinger.


So put me on a highway
And show me a sign
And take it to the limit one more time

(The Eagles)

Good morning and welcome back to the flickering pack. On the heels of the snazziest week in a mighty long time, it's time to dig in for another long climb. While the green screens weren't without casualties, the major averages shrugged off high profile misses and geopolitical disses to plant upside seeds in the mindset of the masses. After a rough and tumble coupla months, you can't blame the Matador Crowd for quickly embracing this sudden spate of optimism. One week does not a market make, however, and it remains to be seen if we've turned the corner to better days or if this was a burp in a broader malaise.

Last week, when Centex and Texan shot higher on earnings, we pondered whether the current blues were already baked in the cake. It was a timely noodle, if for no other reason than it provided the lens through which many a bovine chooses to use. As a big-picture bear--one who believes that either asset classes, the U.S dollar or both will ultimately fail--I chewed that dew with a grain of salt. As a trader--someone who's paid to profit from the journey rather than pontificate the destination--I picked my spots on the long side, trailed 'em with sell-stops and balanced (a bit early) into the weekend and, by extension, this morning.

Our future financials prospects come down to one very simple question: Can our Central Bank effectively walk an increasingly thin tightrope? Friday's light GDP was a convenient excuse to rally the tape as the "light at the end of the tunnel" crowd got loud into a thin summer session. But with consumers (70% of the GDP) ever-dependent on a fragile housing foundation, we're left to wonder whether "soft" is indeed good. In particular, if we're to draw a distinction between legitimate economic expansion and the debt-induced largess, we must be mindful of the depth of discretionary income nestled in societal pockets.

A particularly worrisome dynamic for the free-and-clear crowd has been the complete pukage in the transports. While they were one of five primary points of pain--retailers, small caps, tech and homies being the others--the trannies lagged considerably as their brethren enjoyed a rather respectable bounce. That got me thinking about the Dow Theory and, as I nursed my health through the sunny summer Sunday, I chased down the recent thoughts of octogenarian Richard Russell. I found it interesting that his opinions echoed those often voiced in the 'Ville. Indeed, as we toggle through a 'flation debation, there seems to be a stag party waiting in the wings. Buckle up Minyans, this ride is about to get interesting and interestinger.

Some Random Vibes on a Minxy Monday

  • We opined Friday morning, while chewing on a market compass that was pointing "north by north," that S&P 1280 and NDX 1510 were intuitive levels for the rally to fail (or, at the very least pause). As it so happened, we topped within a kitten's whisker of those levels and they remain on our technical radar as we power up this five day pup. The S&P range remains 1220-1280, until proven otherwise, and Mr. Valentine has set the price.

  • Exxon Mobil was the headline grabber last week as it posted eye-popping quarterly results. We noted the acne in the XOI (oil index) on Wednesday and humbly opined (once again) that energy is well on its way to the top weighting in the S&P. I'm not smart enough to identify when this particular patch will wrestle that honor from the financials but, for what it's worth, it remains my most lucid thought in the marketplace.

  • I've heard alotta folks point to the lack of volume as a potential fly in the upside ointment. Could be, rabbit, although I'm not a big fan of using this as a raison d'être during the dog days of summer.

  • There was a fair amount of stagflation chatter in the weekend press despite the lofty performance by the mainstay averages. This should be old hat for Minyan faithful as we've been monitoring this dynamic for quite some time. In fact, my back of the envelope calculations finds more than 275 articles and Buzzes on the subject from mid-2003 and early '04. Hey, nobody's ever accused us of being late-to-the-party bandwagon types in the city of critters.

  • Last but certainly not least, we're T-minus ten days until the start of our third annual Minyans in the Mountains financial retreat. We'll be (at least) 230 Minyans strong this year as we gather our community to network and noodle this very complex financial fabric. While we've SOLD OUT Vail Cascade, we've got some space left for last-minute Minyans who wanna attend. Click here for more information as we ready ourselves for our yearly pilgrimage.

Good luck today.


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