The Joshua Tree
There has gotta be some critter labor laws out there!
"See that sign up here?" "DEFCON." That indicates our current defense condition. It should read "DEFCON 5," which means peace. It's still on 4 because of that little stunt you pulled. Actually, if we hadn't caught it in time, it might have gone to DEFCON 1. You know what that means, David?"
Dr. John McKittrick, WarGames
Good morning and welcome back to the War Room. It was a rapid respite at MVHQ as the clock is on and there's much to do. With one week to go before Festivus West, our collective resolve has been put to the test. "Seriously Toddo, this is no fun!" said Hoofy the bull from under the gun, "you've set a goal as big as the sun in a quest for a 'fest that can't be outdone!" Can the critters now shift their gaze to the tape or will they revolt and attempt to escape? A new week is here so they better step up as we ready anew for a new minxy pup!
It was a round trip to Nowheresville last week as the Minx rode some August flows higher only to get beaten down on the back-end. While the takeaway tally was a rounding error, the action under the hood offered ample pause for cause. In particular, the high flying homies took it on the chin and our beloved piggies broke a level of sin. That action, along with some stealth supply in other rates-sensitive sectors, has sharpened the focus on Elmer as he prepares to hike up the hill.
I slipped two legs in my metaphorical fur last Tuesday (50% conviction on the short-side) as the combination of looming resistance, toppy stochastics and a lopsided lean proved too tempting to ignore. As I set a fairly tight stop ten handles above my entry point (S&P 1255ish), I rode the posture through a few slithery sessions before finding a Red Dye stride. One of Boo's keys was the oft-discussed BKX 100 level which dutifully wilted in the heat of passion. I told our furry friend that if he wanted to tighten up his risk-profile, he could now roll his stop to the other side of that line.
As it stands, I didn't nibble on that roll (yet) as I was intrigued by the breakdown in the market internals. I opined on Friday that we would likely see a downside probe this morning and that continues to be my sense. How the tape reacts to that test (breadth, leadership) will offer valuable clues for the daily dance although-for what it's worth-I think that there's a bit more meat to the ursine bone. S&P 1220 should serve as a first support and, if broken, S&P 1180ish will eventually emerge as a focus.
We power up this Monday pup to find Europe gigglin' green, the dollar losing steam and crude getting' mean ($63/brl). The rumortrage market is alive as well, as chatter overseas of a Cisco/Nokia marriage has investment bankers licking their chops. Big cap tech will be a focus this week (Dell and Cisco report) and I wanna keep Microsoft on my radar (it traded fabu last week). Finally, and lest we forget, we should expect a fair amount of posturing into tomorrow afternoon as traders get ready to lace up their boots.
Good luck today.
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