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Black and Boo


This is one humbling business!


When Black Friday comes
I'll collect everything I'm owed
And before my friends find out
I'll be on the road

(Steely Dan)

Good morning and welcome back to the hand slap. After many months of taking his lumps, young Boo turned the tables and thumped the new grump. Hoofy was beaten, at times he was bruised and the bovine left Thursday feeling sad and confused. Is this the beginning of new ursine winning or will the Minx soon bounce and leave bears spinning? It's freaky Friday in the city of critters so lets finish up and not be a quitter!

You can't blame the bulls for not paying heed after playing the tape with such verve and such greed. We spoke recently about the diaper shortage in Minyanville and how long it's been since there's been real (any?) fear. The VIX has been eyeballing adolescence, the bull/bear ratios are mucho imbalanced, the sector bell curve looks like it's gonna fall over the right side of the page and the entire free world has been conditioned to buy weakness. Now that we've gotten a first, second and (for the first time in recent memory) third dip, how will the brazen bulls react?

I've been pretty bearish for three years which, unfortunately, included the better part of the last six months. Still, I've little doubt that when the dust settles and the music's over, this year's rally will look like a pimple on an elephant's ass. Alright, maybe that's a bad analogy (and visual) as there was real money to be made during this vicious phase. My point (and yes, there is one) is that there are trades and there are investments--the definition of the latter should never be a function of the former gone awry.

Is it too soon for an autumn swoon? Well, the "intangible" backdrop, in my humble opinion, dictates that a more meaningful downside dump could occur at any time. That, of course, doesn't mean it will--we know that there are serious (and powerful) agendas in play, both on a global basis and into quarter-end. Still, the flashing lights and sober sirens have been widely discounted and Boo is now viewed as a new age chicken little. Please remember how absurd the notion of a sharp rally was while you were shopping for duct tape. The path of maximum frustration rarely rewards the consensus for very long.

First things first, the S&P 50-day moving average is sitting right on the G-Spot and the bulls will attempt to dig into that fertile ground. Europe is sloppy (as a function of the late day swoon) but the macro tells are marginally equity positive. The dollar has some green back, crude has spilled a bit and gold lost some luster. THE question remains whether the bulls are trapped at higher prices (gaming a quarter-end march) or if they're saving some ammo to flank the bank.

It's gonna get thinner as we edge toward the holiday weekend (I should be so lucky) so stay on your toes and sniff with your nose. The financials remain uber-important (the BKX is sitting on its 50-day moving average) and the semis (which were sticky green for most of yesterday) will look to reassume leadership. Smell the morning breadth as well, as the internals have been a consistent tell. And think positive cookie--we're a scant seven hours from family and football.

Good luck today.

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