By Todd Harrison Sep 23, 2004 8:21 am
It's not important to play every trade, it's only important to win the ones you play!
No mass confusion
Rhymes so hypnotizing
Known to cause an illusion
Good morning and welcome back to the blind-side sack. The cross-over dribble arrived in the 'Ville as a slew of bad news caused the mojo to spill. The damage was broad and the crimson was deep as the bears put the hurt on the blind bovine sheep. "The sneaky bull trap caused some traders to snap," said Boo to his crew as he rose from his nap, "but wait'll they see what I've got on tap as I ready my paw for a back-handed slap!" Is it true--can it be--a Red Dye jubilee? Or will Hoofy and friends bring the bears to their knees? We'll know soon enough as we shake off the jitters and ready ourselves for a dance with the critters!
Yesterday's troubling tri-fecta (Fannie (FNM:NYSE), Morgan (MWD:NYSE) and crude) stirred the pot as the bears brazenly licked their chops. The bravado was not dissimilar to the Matador roar heard just one day before. Yet despite the two-sided proclamations and anxious anticipation, the last few days--much as the last year--have had a little something for someone and alotta nothing for everyone. Indeed, as 2004 heads to the home stretch, Hoofy is ahead by a whopping 1.64 S&P points and he's fought for every penny. And so it is, Minx 2004, where you're only as good as your last trade and tomorrow is promised to nobody.
There have surely been opportunities for the keen of eye on the nimble of hand. The dichotomy (to date) between the SOX and trannies is proof positive that there were trades to be made. In a range bound tape, sector rotation is where the food is found and traders are gang tackling every morsel like Collins in a candy store. The bears will argue that a haphazard market, low volatility and minimal returns are the hallmarks of a bear market. I won't disagree--you know that--but we've also learned the caveats of complacency.
As the next six sessions promise to be nutty (into quarter-end), the ability to step back and gauge the rage will assume added importance. There are alotta different styles among the Minyanship--some are active, others invest and many are hybrids--but the day-to-day nuances (read: noise) can easily cloud our vision. I opined a long while back that patience and discipline would be the common denominators of profitability and that's never been more true. With 8000 hedge funds gripping the handlebars with all their might and substituting size for volatility, you get the sense that the compression is finally starting to fray.
There remain reasons to be bullish (corporates, performance anxiety, the 'hand') and there's cause for concern (financial food chain, complacency, geopolitical risk, crude). The minxy ingredients seem to shift daily with the price action determining which inputs matter and when. Hence my earlier point about taking a step back and not getting caught up in the kinetic energy surrounds us. Despite the benign volatility readings, angst levels remain high and that will manifest via the flickering ticks. Don't trip yourself up by letting emotion dictate your financial decision making process. It's too important of a juncture and the stakes are much too high.
We power up this Thursday pup to find Europe in the red (on the heels of yesterday's squeal), the dollar givin' some greenback, metals a smidge higher and pre-market futures pancake flat. While there are a ton of crosscurrents, I will offer that the financials, crude, semis, internets, small caps, cyclicals and fixed income should remain our focus (and you wonder why traders are A.D.D?). A tactical approach and steely nerve precision will serve us in good stead so stand up, give yourself a stretch and let's put some jingle in our jeans.
Good luck today.
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