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Hamptons and Framptons


The 2:15 announcement will change your screens considerably!


Oh won't you show me the way (everyday)
I want you me the way
I want you day after day
Oh won't you show me the way (everyday)

(Peter Frampton)

Young Fokker, dressed in a white linen shirt and khakis, strolled into the office this morning asking if we could open a South Hampton office. Evidently, the young lad was making the rounds this weekend and was spotted rubbing elbows at the polo match, walking the red carpet at a movie premiere and canoodling with Brittany Murphy at Jet East. Can Page Six really be that far behind?

I told the kid that he has a better chance of seeing Flipper than he has of me getting long Hampton real estate. While the scenario discussed in this morning's opening missive is admittedly a big picture concern, it's important to act in a manner consistent with your beliefs. For me, that means renting an apartment and conserving capital whenever possible. The time to acknowledge risk is when the market is "healthy" (read:higher), for by the time the masses realize the underlying issues, it'll likely be too late.

That said, I'm gonna turn my attention to the daily flail as every journey begins with a single step. The opening action is muddled and thin, which is what one would expect in front of Elmer's cookbook. I haven't spoken to a single person who thinks he snips the bips this afternoon and while I love playing salmon to the conventional stream, I don't believe he'll bring his scissors either.

A few things to watch today. There are two SOX trendlines, one drawn from late April and the other from early March, and the semis are currently sitting dead smack in the middle of them. A pure technician would say that the chips broke the first support, retested it and failed. If (big if) they now break the second support (around SOX 370), the Red SOX will likely begin their August melt. Sorry Pedro.

The two focuses on the big board are the financials and the cyclicals. Capital One Financial (COF:NYSE) is up nicely on credit quality optimism and that's given the other money stores a nudge. Deere (DE:NYSE), meanwhile, beat estimates but its lethargic reaction is weighing on the cyclicals. Watch these two groups, including Citigroup (C:NYSE) and General Electric (GE:NYSE), as guides for the old school.

S&P 988ish, BKX 879ish and NDX 1240ish (50-day moving averages) are the technical levels to monitor today as we trudge our way through the muck. We remain within the much discussed trading range, the environment is noisy and it's Kate Moss thin out there. As such, there's an element of chaos in the daily dance and both camps are digging in for range resolution.

The beauty of technical analysis is that it offers a backdrop with which to trade depending on your risk profile and horizon. S&P 988 is the first resistance, the G-Spot (S&P 1000) is a more formidable zone and S&P 1015 is THE level. I would be surprised to see a push back above the erogenous zone but if we do, Boo will reassess his press. Until then, I've given him the nod to fade (read: sell) into these rallies.

Why don't I believe? The deteriorating internals (the "market of stocks" vs. "stock market" argument), overt complacency, lack of fear and composition of earnings (cost cutting and government spending vs. end demand). That doesn't mean they can't rally--the liquidity fluidity is still floating around and hope springs eternal--but I continue to have my right hand up and eyebrow scrunched. As always, just one humble trader's honest opinion.

I'll be back.

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