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Double Vision


Reactive trading puts you behind the crowd.


Trouble with you is the trouble with me
Got two good eyes but we still don't see
Come round the bend you know it's the end
The fireman screams and the engine just gleams

(Grateful Dead)

Good morning and welcome back to the ursine snack. On the heels of last week's crimson dump, our favorite bear is gettin' plump. "I've said revenge is best served cold," said Boo as he was feeling bold, "and since the bulls all buy and hold the only green they've seen is mold!" Can Hoofy somehow save the tape and feed the bears more sour grapes or should he just try to escape until he gets in better shape? Come with us and shake those jitters cause it's time to climb into the city of critters!

While last year was a tutorial of how a prevailing view can self-fulfill (particularly when jacked with simulative steroids), 2004 has reintroduced the path of maximum frustration. The universal consensus has been that the financial markets would be buoyed by the upcoming election but, ironically, the political infighting is the very reason why the psychology metric will face an increasingly steep slope. With the economy balancing on a very fragile perch (and recent polls already indicating a wide comfort margin for the Kerry camp in that regard), the "war on terror" seems to be the wild card for the incumbents. Therein lies the double-edged dilemma of public perception and the risk to the world's largest thermometer.

As the technicals are officially "broken" (S&P 1080 and NDX 1360 are new resistance) and the fundamentals are decelerating, the Matador City crowd is betting that the nervous (albeit hopeful) psychology--coupled with Elmer's helping hand--can somehow turn the tape. The risk to their position is that the stagflation chatter (old hat to many Minyans) is an embryonic thought for most of the world. The writing is on the wall of worry-inflation (oil), sluggish growth (sans stimuli), employment (jobs data)--but if that scribble dribbles into the mainstream media, it'll be deja Boo all over again.

We'll likely see some posturing in front of tomorrow's twin catalysts as traders used the weekend to digest the mess. Most folks are certain that we'll tighten rates but I'll again say that applying brakes into a skid may not be the right way to avoid an accident. And while the field position is clearly more "heelsy" now, it's worth noting that the raucous crowd hasn't greeted the bellwethers too well of late. That can certainly change (watch crude!) but we must recognize that the path of least resistance is to the downside.

We power up this Monday pup to find Europe listening to chin music (DAX broke to fresh '04 lows), the metals slightly pink, the dollar migrating above new support (DXY 88) and the stateside futes nibblin' green. Angst levels are elevated to the point that a Snapper back to previous support shouldn't shock anyone but, at the same time, we've still got plenty of downside room (S&P 1050 first stop). Map out a cogent strategy so you're prepared for whatever pitch the Minx tosses and, above all else, think positive Minyans. It all starts within.

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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

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