Good morning and welcome back to Katrina's whack. A day after threatening to sink the Gulf Coast, the hurricane has morphed into a ghost. Some damage was done and it certainly hurt but Hoofy dug deep and fastened his shirt. "When we didn't melt to start the new week," he said as he led the minxy critique, "the pressers turned tail and started to freak and bid up the tape with a squeezy technique." Is it one and done, this upside bull run, or can the ursine continue their fun? It's turnaround Tuesday so let's dig on in as we ready to take the tape for a spin.
Hoofy had some pep in his step as he made the rounds last night at The Birdland. We can't blame him, I suppose, as August has been a serious bummer for the financial markets. I was belly up at the bar (drinking seltzer, of course) as I watched him glad hand to the crowd and work the room. By the time he sat in the stool by my side, he had a smile on his kisser that touched both ears.
"Feelin' pretty good?" I asked nonchalantly, trying to be tactful without coming across as a Debbie Downer. "Yeah man," he said without making eye contact, "When they opened crude near $70/brl and the futes were only down a handful, you could feel the tide turn as Katrina faded, the internals improved and those twisty stochastics started to uncoil. Smells like a recipe of success to me."
I nodded my head slowly and let him soak in the moment. "Can I ask you a question, pal?" The large (and somewhat intimidating) bull sighed deeply and swiveled his seat towards me. "While we've talked about the potential lift, please look at the other side of the gift. There was no volume, the S&P and NDX August downtrend lines are still in tact and the banks have yet to mount their first technical hump (BKX 98). I'm not saying that we can't see some more jig but yesterday's price action, in and of itself, did very little to support a broader shift."
"So you're still stickin' with your view that August will end the way it started?" The crowd around us suddenly silenced and I couldn't help feeling like E.F Hutton. "Hoofs," I said while putting my paw on his shoulder, "I'm smart enough to know that I'm not smart enough to game the daily dance. What I can do is offer my honest vibe with hopes that it lends value. As it stands, the only difference between now and the end of July is that we're somewhat oversold in the short-term. That could lend to bounces like we saw yesterday but issues remain for the tape."
As Snapper took the stage and began wailing on his sax, I leaned closer to Hoofy and whispered in his ear. "Listen, how you trade 'em is a function of your time horizon and risk profile. The levels we discussed yesterday remain in play and you can use them however you like. Just remember, with the holiday sneaking closer, the ranks will thin and liquidity will dry up. That adds an element of uncertainty that is tough to game but necessary to respect. "
The big bull spotted Daisy across the room and made eye contact with the Dairy Diva. I knew that his focus had shifted and decided to use the segue to say goodbye. "Enjoy yourself, cookie." He smiled wide and bee lined to towards the object of his desire. I was happy for him as I knew he was feeling pretty snazzy. And in this day and age, tomorrow is promised to nobody.
Good luck today.
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