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The Frisky Buffett

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Stay down!

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It's these changes in latitudes, changes in attitudes
Nothing remains quite the same
With all of our running and all of our cunning
If we couldn't laugh we would all go insane


(Jimmy Buffett)


Good morning and welcome back to the shaking shack. It's a heckuva week for the ol' minxy freak as the bulls try to plug the crimson red leaks. "I've done all I can to rescue our town," said Hoofy the bull while sporting a frown, "the weight of the world is wearing me down and it's starting to feel like we're all gonna drown!" Will the bovine be able to stop the landslide and save all their friends from meltage worldwide? Or are Boo and his crew finally hittin' their stride with nowhere to run and nowhere to hide? It's Thursday, my friends, so shake all of your jitters and ready yourself for a romp with the critters!

The stress test is being pressed as the bears fire bullet point after bullet point at the Minx. Between the rude crude, technical mood, political feud and earnings so screwed, it's no wonder that Hoofy is getting nervous. The word on the Street is that this latest round of tech earnings are simply the beginning (of the end) and the September quarters are dust in the wind. That psychology shift--if it continues--remains firmly in migration mode and has yet to hint at signs of panic.

Whether or not that twisty road is a switchback or a dead end remains to be seen. It's a natural progression, say the bears, as the writing has been on the wall for a while. "The Fed has given us free money and we can't turn it over," opines a wry Boo, "If 4% growth is the best we can muster with negative real rates, what does that tell you about the slack in the system?" The bear has a point--and as is typically the case, his credibility is tied directly to the bottom line.

The hope in Matador City stems from the fact that there has been so many negatives and the Minx is still breathing. By all accounts, a ten percent haircut in Cisco (CSCO:NASD) could have delivered the knockout punch but rather than indiscriminate selling, we saw a calm rotation into the financials, biotechs, internets and big cap pharma. The bulls will argue that this is a sign of underlying strength and pent up demand. Are they right? The stochastics are "twisty" (bullish), but this particular wall of worry is particularly high (with an apex at S&P 1080).

Hewlett (HPQ:NYSE) is trading with a mouth full of dirt after (yet another) tech bellwether bites the dust. That should help contribute to the "S's over N's" dynamic that's been in play of late. Keep an eye on Wal-Mart (WMT:NYSE) as well on the heels of earnings that were "solid vs. expectations" but contained flies nonetheless. The breadth, financials, semis (ouch!), small caps, cyclicals and crude round out today's trading tells.

Good luck today.

R.P.

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