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A Critter Picnic


My diet consists of a steady helping of bulls.


Good morning and welcome back to the Hump Day grump. With the tan slowly fading from Daisy's raw hide, the critters decided to gather outside. Last night, while listening to an impromptu jazz concert in Central Square, they sat on the great lawn and discussed the ticks that flicker ever-so-quicker. Here's what they had to say:

Hoofy: (singing along to the music) I can see clearly now the rain is gone. I can see all obstacles in my way... (stops to look at Boo) Can ya see where I'm going with this? Two of your primary catalysts for being bearish--political uncertainty and rude crude--are gone. Adapt or be slapped!

Snapper: (head bobbin' to the beat) The bull has a point, pal--look at the action in the cyclicals. They're a couple of points from an all-time high. And note the strength in the piggies--with corporate spreads drum tight and the economy grinding ahead, the rate debate has all but abated. Don't fight city hall!

Boo: (removing his head-set) Did you guys say something? Perhaps about the cyclicals running into resistance at the top of their eight month channel? Or was it something about the stochastics in the financials being more twisted than Toddo's scale? Perhaps you confused clarity with resolution, a common mistake among many short-sighted traders?

Daisy: Come on Boo, you yourself said that the stock market is the world's biggest thermometer and there's a natural (cough!) tendency for the tape to run with the incumbents. Equities have always been the most emotional asset class and vacillate with perception. The reality is that the concerns you harbor are big picture and there's little evidence that folks will focus on it.

Sammy: The reality is that there is always a reason to be bullish and bearish--that's what makes markets. What we must discern is where the best probabilities lie. A quick sift through our metric mix finds a flurry of conflicting information. Technicals? Which market? The semis (which have broken down) or the S&P (that has broken out)? The VXO (which is screaming WARNING!) or the Institutional Investor weekly sentiment survey (which has 46% bulls and 26% bears)? The oscillators (toppy) or the selling pressure (non-existent)?

Boo: Alright, so maybe that's a push. But the fundies are in trouble (looking at everyone's faces)...come on, you gotta give me that?!? Intel (INTC:NASD)? Poop. Autos? Poop. Retail sales? Poop. Oh sorry--we can't rely on retail sales figures because they've been pre-rationalized by Charley, Frances and Ivan! Still--the September tech quarter is extremely back-end loaded and alotta them are not gonna make numbers. Particularly sitting on all that inventory!

Hoofy: Maybe, but the market is a discounting mechanism and the weakness we saw was a function of this, uh, soft patch. In six months, with the election a memory, crude settled in and business popping, you'll wanna buy stocks and find yourself behind the curve again. Just as you are now.

Boo: What is this, Woodstock? Who slipped Hoofy the veal marsala?!?

Sammy: Timing, Mon Frere, it's all about timing. I agree with you that what ails our financial system can't be solved with an election. But I would also urge you to recognize the forces in play and agendas involved. Our country is stepping through the looking glass and we're witness to it. Remember how massive the mechanism is and respect our place in the process. Capital preservation must precede profiting if we're to lay claim to the future.

The sun began to set as the music set the stage and the critters sat back and reflected on the conversation. They all knew that the next few months were gonna be a wild ride and each had a reason to be hopeful. Still, with the considerable cross-currents and ever-changing script, they understood that patience and discipline were the hallmarks of any successful strategy. They collectively exhaled, enjoyed the scene and let themselves relax. For they knew if nothing else, stress would be waiting for them in the morning.

Good luck today.


No positions in stocks mentioned.

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

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