Meet Joe Kool
By Todd Harrison Sep 07, 2005 8:48 am
BKX 100 remains the nearest term level of focus.
Good morning and welcome back to the swarming. Hoofy stepped up and rallied the tape before Boo and his crew could map an escape. They came for them hard and lifted most groups, a most welcome sight for the Matador troops. "The late summer bummer was a tough nut," said Hoofy the bull of his previous rut, "but after the August check to my gut, I've shown the world that I can still strut!" Is the trend now a friend of this bull on the mend or will it portend a means to an end? We'll know soon enough as we stare at the pump and ready anew for a hike up the Hump.
The Minx is feeling feisty as we roll into September and edge towards quarter-end. And with the benchmark averages sitting on either side of the flat line for the year (DJIA -1.8%, S&P +1.8%, COMP -.4%), performance anxiety is palpable as we sneak a peak around the Street. It's been one short week since Katrina set down and the collective psychology has already pulled a 180. Indeed, as portfolio managers start looking for their #2's, the only fear seems to be that of missing the rally.
We've touched on a number of topics in recent weeks-the potential that crude has tagged an '05 top tick, the considerable headwinds facing the dollar, the unbridled and unwavering equity optimism and the subtle yet important shift in the near-term technical nuances (once we broke the August downtrend). Yet, despite my best efforts to provide valuable eyes, I failed to climb aboard yesterday's Matador Express and fully exploit the racy price action.
I understand that it's more important to win the trades we play rather than play every day. Still, as the only difference between a mistake and a lesson is an ability to learn from it, I wanted to circle back to a Minyan Mailbag that appeared on the Buzz last week:
"Toddo--Since Friday morning, we've had bad sentiment, Elmer housing bubble comments, the biggest natural disaster in US history, gasoline up 30%, half a dozen tech warnings and a horrific PMI report. And the S&P is flat? Minyan D"
Hoofy would argue that the Minx is giving him the wink and he'll be spot on if we're higher in hindsight. The ability to absorb bad news is often a precursor of underlying demand. The fatal flaw in that thinking, of course, is that it'll be proven wrong as a function of price.
There is the possibility that we're simply working off the oversold condition after the bummer that's been August. That's one of the reasons I'm keying on our daily tells for trading guidance in the context of the broader and bigger picture.
Hindsight is 20/20, we know, but the "bend not break" mentality has been a hallmark of 2005 (remember General Motors?). The question that I wrestle with is when the straw will be too much for this particular camel. My fear-and one that I've expressed often-is that an imbedded sense of complacency has become prevalent in the mindset of the masses. And as anyone who traded through the bubble can attest, there is a very fine line between momentum and exhaustion.
Price is the ultimate arbiter and I'm not smart enough to know what the tipping point is. I'll maintain, however, that it's dicey to put a positive spin on this most recent natural disaster. Not when it's gonna cost upwards of $150 billion. Not when that figure is on top of a very expensive war that has no exit strategy. And not in the context of the massive imbalances, deficits and debt that already exist.
I don't have any answers, Minyans, but I'll often ask some unpopular questions. Most media channels thrive on positive news that serve to further craft the collective consciousness. Our goal in Minyanville is to provoke thought and ponder the probability spectrum without pride or prejudice. At the end of the day, we're all responsible for our own financial choices. It only makes sense that we see all sides of the trade before we assume that risk.
Good luck today.
No positions in stocks mentioned.
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