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The Capitulation Situation

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We've traded right back to breakout support. Watch this zone!

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Good morning and welcome to the towel toss. With eight months (and most shorts) down, there's barely any fur around. As the bovine smile and buy dips, few bears are left to lick their lips. The tape is strong, the crowd is long and Boo just keeps on betting wrong! Is this for real, this stock appeal, or are there more banana peels? It's a new week full of flicking ticks so let's start up and get our fix.

Last week's action triggered a lot of introspection and self-examination among the remaining ursine. If we're to dynamically assimilate our primary metrics, the legs under the upside table have seemingly become sturdier. The long standing summer range decisively broke out, tech bellwethers Intel (INTC:NASD) and Cisco (CSCO:NASD) furthered the fundies, the liquidity fluidity has shown little signs of drought and the psychology patience is wearing thin. At what point does bearishness become stubbornness?

The conundrum for Boo's crew is that, while inherent risks remain, the momentum has swept them under the trading radar. After three horrid years, there is a collective agenda in place to reflate the economy and the psychology of the voting public. The laundry list of potential problems reads like a recipe of disaster. There's no job growth, a ballooning deficit, record insider sales, manic sentiment, insane debt and a dangerously fragile geopolitical balance. As we learned in the late nineties, however, the issues will remain moot until they speak loudly.

To qualify a comment I made late last week, I remain of the view that a grizzly scare will come to bear. What remains elusive, however, is the timing element of a scary development. If we're to focus on the journey rather than the destination, the near-term squall is tough to call. Textbook technical analysis dictates that the time to buy is on the subsequent retest of an acnefest. During Friday's late day fray, the S&P held the 1015-1020 zone and, as long as it does, the bulls deserve the benefit of the doubt.

As the positive confirmation trickles across the tape, the delicate balance for traders is to ascertain how much is rear view and how much will spark anew. We know that the double barrel stimulus provided green protein for the divine bovine, but at what point does end demand stop being so bland? That--or, perhaps more importantly, the perception of such--will dictate the psychology metric as we cast our eyes towards year end.

In Minyanville news, our latest charity auction is set to begin tomorrow and the critters are gettin' gussied up! The winner will be featured in animated caricature form in the new Minyanville trailer that will premiere at the Critters Choice Awards in New York City on November 12th! In addition to that, they'll receive two VIP tickets to the show, a chance to meet the Minyanville professors take a snazzy gift basket home! Please join the Saturday Night Live Band, Warren Buffett, Jimmy Fallon, Santana, the cast of the hit show "American Chopper" and a host of other stars in supporting this worthy cause! It's for the kids, Minyans, it's for the kids!

Good luck today.

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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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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