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Jerk Chicken


Strategy is a strength and not disaster


"He hates these cans! Stay away from the cans!"

--Navin R. Johnson

The downside test is underway and traders everywhere are warily eyeing a pop quiz. Indeed, this morning's sickness dragged the Minx to the brink of breakout support. With the XBD (brokers), BKX (banks) and SOX (semis) all loggin' double-digit fits and the breadth smellin' worse than a mouse fart, that whiff you hear is one of fear.

There are a lot of crosscurrents floating around today's tape. As I just discussed with Minyan Fleck, "it" is out there but "it" won't matter until the collective psyche evolves its focus. Is it really a shocker that mortgage lenders are in a pinch? Not really--we've been discussing the rate ramifications since the June swoon. Alas, timing is everything and the only determinant of what really matters is the almighty Minx. It is, by all accounts, the worlds largest thermometer.

So here we are. The semis are down 3%, the financials are being clipped for a deuce and the rotation into the consumer names is in full swing. Sounds easy, right? Not so fast, flash--textbook technical analysis dictates that the time to buy a stock (market) is on the subsequent retest after a breakout. With the current tickle of S&P 1015, we're almost at that exact point. It looks like this is where the rubber meets the duck.

My big picture bearish rant is old hat by now so I'm not gonna be redundant. My big picture bearish rant is old hat by now so I'm not gonna be redundant. I will simply offer that we are sitting on some serious support and a little fear may prove to be healthy. However, with sentiment so complacent, everyone and their sister looking to buy dips and the bull camp uber-crowded, "it" could happen at any time.

The bullish elements today? Traction in General Electric (GE:NYSE), Cisco (CSCO:NASD) and the retailers. I'm not sure if that'll be enough to turn the tide from the crimson ride but if (big if) Snapper makes a cameo, those are likely the names that will outperform.

As always, I hope this finds you well.

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