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Show Me the Money!

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As we edge higher and the inevitable chatter of all-time highs comes back in vogue, I'll ask that you view the dew through a few different lenses.

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The stars are out and shining
But all I really want to know
Oh won't you...
Show me the way

(Peter Frampton)



Good morning and welcome back to the Matador track. It was bound to happen, right? No sooner did I post my cautionary Keynote from Vail--syndicated, no less--and the bovine are out in force. Soft landing. Technical affirmation. Upside earnings surprises. It's enough to make any ursine rethink or blink--price action does that--but I would offer several contextual vibes as we power up this Thursday pup. They're in no particular order--dare I say they're random--but they'll hopefully help as we attempt to fit the pieces together.

  • It shouldn't come as a shocker that this latest equity lift comes at a price. And that price is called dollar devaluation. There are those that will argue that the softer greenback is an intuitive, natural, symbiotic reaction to the end of the rate hike cycle (it certainly makes sense). But looking back--and looking forward--this seems to be our choix à faire. As we edge higher and the inevitable chatter of all-time highs (DJIA) comes back in vogue, I'll ask that you view the dew through a few different lenses. I know we're conditioned to track our gains (and success) in dollars but we must respect that the basis of measurement is suffering some serious shrinkage.

  • In a word, time horizon. OK, that's two words. But it's one concept (and a very important one at that). While my message was conscious and consistent, it was offered with broad strokes and benevolent intentions. It doesn't mean, however, that a dour destination impedes our ability to make some shekels along the journey. Case in point, I bought the bungee in the trannies on Tuesday in an attempt to make hay while the sun shined. It was a pure trade (versus some cheap and cheaper autumn piggy puts) and I sold the exposure into TRAN 4400 (resistance). Just tradin'--which is entirely different that locking into a big picture vibe and fighting the tide.

  • Volatility. I mean, honestly, if profits reside in the chasm between perception and reality, there's some meat on the bone between what "is" and what's perceived to be. VXO 12? Are you watching television? Do you see what is going on in the world? I am and, for what it's worth (which may not be much), I got somewhat aggressive late yesterday buying gamma. There are alotta ways to skin that....er, implement that trade and, for my part, I like buying out month cheapie puts. I can always buy stock against them (on a ratio) and trade the position but, at these levels, I'm comfy with the idea that I'll get longer higher and shorter lower.

  • What am I watching as Street signs? A whole lotta sectors.

    • The financials, as the BKX again eyeballs all-time highs. The piggies are in a double top (negative) until proven otherwise but fresh acne would bode well for bulls, if and when and any way you slice it.
    • The homies. As discussed, I can't seem to shake the sense that, following a 50% one year haircut--and in the face of a slew of bad news (the market is a leading indicator)--this complex could continue to see a reflex rally. What I'm trying to resolve in my crowded keppe is what that means for the collective psychology and, by extension, the broader tape.
    • The retailers (as back-to-school chatter gets going and the retail index probes multiple bottoms), the Russell (as it tickles the downtrend line from the May highs) and the trannies (at fresh resistance). This tri-fecta was jack hammered and they're now attempting to morph from an oversold bounce to legitimate leaders.


Alas, pencils down as I've gotta get this posted so I can hop the fence and hit the Buzz. If you missed the Vail Trail Chronicles, give it a read (yes, I miss Vail) and, if you missed Vail, know that we've got something up our sleeves for a MIM of a different breed (Minyans in Manhattan!). All good things in all good time, my friends, and we'll have further dets as we circle the wagons and try to do something special for the kids.

Good luck today.


R.P.

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