The Ravin' Maven!
Under NDX 1360, I wanna unleash the hounds!
Good morning and welcome back to Friday in Freakdom. Last night, after a day of reflective remembering, I collected the critters and joined my family for dinner at Rosa Mexicano. It was, in many ways, a new beginning. It was the first time that my mother met Daisy, it was the first time I've seen my grandmother in a few months and, perhaps most exciting, it was the first time that my grandmother--affectionately known to Minyans as the Margarita Mama--dabbled in a libation of pomegranate creation!
Daisy: Take it easy on those Dorothy, they're creepers!
MM: Ooh, these are good! They taste like a frozen fruit smoothie!
Boo: No more creepers for me, Dot, I've had enough creeps for a lifetime (shoots Hoofy a look).
Hoofy: Judging from your performance, it looks like you've been taking a nip from the bottle all year! (High fives Snapper).
Boo: Dude, I'll admit that I've flunked flank this year but let's keep it in perspective. This rally started as a structural (asset class) shift as the market was flooded with liquidity. As the rising tide lifted all spirits, the psychology bubble inflated and morphed into performance anxiety. As rates hugged the flat line, the individual investor got squeezed into the market. I'm not making excuses, but let's not confuse the issues here--a real recovery won't occur without tangible end demand.
MM: (smiling into her glass) He's right, Hoofy, they sure are making it hard for me and my friends to find any relatively safe investments that yield anything! I was actually thinking of putting my money into the market before Toddy talked me out of it.
Boo: That's my point. They're almost penalizing you for keeping money (safe) in a bank. While that provided incremental demand for equities, it also increases the scope and magnitude of the eventual spill.
Sammy: Do you mean "if" there's an eventual spill?
Boo: No, I maintain a thrilling spill is a matter of "when," not "if. The Fed is trying to buy time and let the recovery unfold. Some will say that it's their job, some will argue that they're acting irresponsibly to future generations. I will only say this--for three years, everyone climbed aboard the second-half recovery thesis. Did you see the UBS Warburg CIO survey? Over 50% of respondents expect a sizeable increase in spending to occur in 2005, NOT 2004. I haven't seen this many push outs since Martin's senior prom!
Sammy: Alright--easy there killer. Let's take our journey one step at a time. Please note technical set-up on the NDX 30-day chart. On Wednesday, the NDX broke a triple bottom around 1355--which also broke the uptrend from the August low--and retested it (on the upside) yesterday. Now, if you draw a downtrend from this weeks lower highs, you have a triple-lindy intersecting resistance level there. If you're a bear, that's the backstop to watch.
Hoofy: And if you're a bull, that same trendline (from the August low) offers support around the G-Spot (S&P 1000). Obviously, S&P 1015 is my preferred starting gate but I'm not so sure that's gonna hold here. A lot will depend on the banks and, in that regard, BKX 850 is the mongo level if and when.
Daisy: What's going on with the animated charity auction? I wanna know who my leading man (or gal) is gonna be! After all, the Critters Choice Awards are two months from today!
Snapper: Yeah, I'm pumped...whenever you've got humans like Jimmy Fallon, the Saturday Night Band, Santana, Warren Buffett, Peter Lynch and so many others supporting the kids, it promises to be a kick-ass event! And wait till you hear what the musical line-up is--it's gonna blow your mind! Minyan Neal Greenberg entered the fray yesterday with his $11,000 bid and he's currently sitting atop the leader board. If any Minyans haven't checked out the Hollywood trailer yet, they should do so immediately and pump up the volume!
MM: That reminds me, I've got to schedule a hairdresser appointment!
Toddo: Grandma, it's not for two months!
MM: Don't talk back to your grandmother! (smiles) Can I have another smoothie please?
The waiter swooped by with a fresh batch of guacamole and a new round of pommies. The tape talk was done for the night and the conversation shifted to the important stuff. After a long day in the somber fray, I sat back and enjoyed the company of my family and friends. As I watched them laugh, smile and get to know each other, I realized that I wouldn't trade that moment for the world.
Good luck today.
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 firstname.lastname@example.org.
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