Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Stress Test


Watch it Toddo!


Good morning and welcome back to the city shack. With lingering thoughts still fresh from Ojai, the critters walked into a spate of supply. The bulls held their ground for most of the day but couldn't avert the minxy decay. "They wanted to run all the way to the sun," said Hoofy the bull of the earlier fun, "but it can't be done if the banks weigh a ton and hold to our head the proverbial gun!" Will the bummer of summer continue to weigh or can Hoofy now host a bovine soiree? We'll know soon enough as we kick off our shoes and ready to board the Minyanville cruise!

With the mountains slowly shrinking in our rear view mirror, all eyes turn to the tape as we juggle the struggles that are the flickering ticks. Before we hopped to the hills, and back when Leo the Lion was dancing on our calendars, I offered that August could be a bovine bummer for the Matador Crowd. That's played out, thus far, and judging from the Trader's Almanac, odds are that it'll stay that way into September.

The question I'm wrestling with is whether this is "the" turn or yet another in a frustrating series of pops, drops, blips and dips. The motivation to frolic in the fur was predicated on a few dynamics, including the Fibonacci resistance (near S&P 1250), lofty (overbought) stochastics and lethargic action in the financials. As two of those three ingredients remain (the stochastics are starting to get twisty the other way), the onus is on Hoofy to reclaim his throne and set a new tone.

I've been a bit behind since returning to the big city (my apologies) but I wanna quickly touch on something I said during my Ojai shpiel that was sparked by a conversation with Pepe Depew:

"The problem that comes from engaging in high risk behavior for which the consequences are absent, even if only temporarily, is that such high risk behavior begins to appear normal, and the entire scale of risk gets adjusted and pushed out."

I was reminded of this particular vibe last night when I watched Moody's dump on General Motors (GM) and Ford (F). Folks have pretty much leapfrogged the risk portion of the risk-reward curve as, well, we've seen this movie before and it had a happy ending. This type of learned behavior is the genesis of the disconnect between perception and reality and while it may not "matter," it certainly adds a straw on the back of a very frustrated camel.

I'll be watching the financials again as they'll offer a snapshot of the camel's knees. If they start to buckle, there's a good chance that the double hump will grind and bump. BKX 100 has been Boo's backstop and as long as we're below that level, my sense is that he'll remain in control. There's a lot more to the tape than one sector-and I'll be watching for rotations and allocations-but as far as broad strokes go, they're painting a pretty wide swatch.

Good luck today.

No positions in stocks mentioned.

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

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos