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Fiddler on the Roof


You always wanna see both sides of every trade.


Nine mile skid on a ten mile ride
Hot as a pistol but cool inside.
Cat on a tin roof, dogs in a pile
Nothin' left to do but smile, smile, smile!

(Grateful Dead)

Good morning and welcome to "I don't wanna be at work today" Tuesday. Come on--we all feel it--and there's nothing wrong with coming and saying it! Let's be honest--it's the last week of summer, the previous three sessions have battled for "lowest volume of the year" honors, there's a giant bull's-eye on the back of the big city and, to borrow an old Jewish phrase, "It's like a sauna in heya!" What to do? Smile, smile, smile...and focus, focus, focus. If we've learned anything over the years, it's that taking care of the minutes will allow the hours to take care of themselves.

Yesterday's stealth melt was a creeper from the opening gun as the NASDAQ internals stumbled out of the gate and never found their footing. Further, as mentioned a few times over the last coupla sessions, several S&P resistance levels coupled with extended stochastics made it tough sledding for the bulls. When we factor in volatility levels last seen during the Atlanta Olympics (complacency) and an electoral race that's entirely too close to call (uncertainty), it's no shocker that buyers are sitting on their hands and biting their tongue.

Hoofy will argue that low volume declines are necessary evils in the grander scheme of things. A peek at the Lowry's Selling Pressure Index--one of the most widely followed technical services on the Street--supports the bovine assertion. According to this gauge, selling pressure is at the lowest level in almost ten years (February '95). The Matador City Committee, acknowledging that we're short-term extended, aren't shocked that we've hiccupped 20% of the gains from the recent S&P low. Par for the course, they'll argue, and if we dip another 20 handles to S&P 1080, it'll set the stage for potential reverse dandruff (particularly if corporate spreads remain tighter than a drum).

The cryptic shtick should continue through the holiday week and, quite possibly, until definitive clarity emerges on Pennsylvania Avenue. And while I'll stand by my musing (from the beginning of the year) that the "we're alright until the election" consensus was bound to confound, I would caution Minyans not to be too myopic in their market assimilation. The mainstream press is laser focused on the ballot box and for good reason--this is a particularly important juncture in the delicate dance for global balance. But the issues that plague this tape have roots dating back to the bubble and they'll remain in play regardless of who sits in the Oval Office.

A quick sniff of our trading metrics finds a mixed bag of tricks. The fundies, from what I can tell, are potentially problematic as technology companies wade through a back-end loaded September quarter (read: they've gotta have a strong anchor leg if they're gonna make their numbers). The technicals are a mixed bag as we remain entrenched in the '04 downtrends but the supply hasn't been motivated (see above). Psychology continues to be hopeful and lazy which is an outright negative unless we've entered into another momentum driven environment. And while the structural underpinnings are eye-popping scary, Elmer has the liquidity fluidity to wash those concerns under the rug (for now).

We power up this muggy pup to find Asia and Europe pink (slightly red), the metals grinding a bit higher (on the heels of yesterday's jig), the dollar off about 30 bips (continues to "do work" at DXY 90) and the stateside futures huggin' the flat line. We'll hear from Beeks this morning (Chicago PMI and Consumer Confidence) and then psychology will carry us towards tomorrow's hump. On a housekeeping note, and just so ya know, I've got an uber-important midday meeting that will require my full attention. I'll chill in the 'Ville both before and after this sit-down but want to thank you in advance for your patience in the interim.

Good luck today.


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