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Saddling Up for Quarter End


Is the market going to stage a repeat performance or have the bears capitulated with last year's playbook fresh in their memory?

Childhood living is easy to do
The things you wanted I bought them for you
Graceless lady, you know who I am
You know I can't let you slide through my hand
Wild Horses (The Rolling Stones)

Why, I'd horsewhip you if I had a horse.
Professor Wagstaff (Horsefeathers)

His neigh is like the bidding of a monarch
His countenance enforces homage
William Shakespeare

Rhyme and reason are running rampant. But not on Wall Street: even they won't get in the way of the bulls stampeding the Apocalyptos – the equity horsemen of the Apocalypse – that is Apple (AAPL), Research in Motion (RIMM), Garmin (GRMN) and (BIDU).

And, the way these stock stallions are galloping across the abyss of risk, you'd think it was the end of the world if you're a money manager and these names aren't in your portfolio. Matter of fact, portfolio managers could stand to lose their jobs or at least be called to the carpet if they were not stocked-up on these names as the third quarter crosses the finish line.

With consumer discretionary stocks getting clobbered on Tuesday, perhaps a brave new paradigm has permeated Wall Street: GAAP, "Growth At Any Price". Get it at the GAAP.

Or, is this week's bullish rage by the Apocalyptos just good ole' fashion window dressing? To be sure, Tuesday's poor consumer confidence figures and low lights from the likes of Lowe's (LOW) could have easily locked the market into a triple digit dip. But, alas, quarter end beckoned.

It will be interesting to see whether it's meandering or momentum, chase or fade after quarter end.

In fact, it will be interesting to see if stocks drift or drive higher this week now that we've closed the book on three-day settlement for quarter end.

Speaking of quarter end, what happened to all the anticipated redemptions ahead of September 30? Did the Fed shot in the arm inoculate the market against redemptions? Will the Fed Fix inoculate stocks against turbulence in October and against future negative data points?

No matter how bad the news on the dark side, it seems wild horses can't drag Hoofy away from his studly rounds. However, come October, will the bulls look a gift horse in the mouth? Or will they take a graceful exit on what cyclically appears to be a test of the highs or will the bulls get a second wind when the fourth quarter bell rings?

Will the oil elephant, the dollar elephant and the gold elephant in the living room tire of standing and decide to squat on Hanky Panky's remote control as an October in a seven year is acknowledged?

September may be the worst market month historically, but October has a nasty reputation.

Did the Working Girls and their Cadillac crew kick the market into cruise control in front of crowded dark side trade going into September? I guess we'll see how they do in October now that the Fed's given it its best shot. We'll see if it's 1998 or 1989.

Last fall there was crowded trade going into what many technicians, including myself, thought would play out into a fourth quarter trough. Instead, stocks broke out. Is the market going to stage a repeat performance or have the bears capitulated with last year's playbook fresh in their memory?

It seems to me that the crowded trade currently may be the bull camp.

Short interest has declined sharply recently.

The bulls seem to have embraced the idea that the long awaited 10% correction is behind us, that the worst is over, and that the market is out of the woods.

However, there are a few notable trees in this forest that may not be felled quite so quickly.

The financial system is still fragile. There's seems a near universality of sentiment that with the Fed on their side, nothing can go wrong for the bulls.

Wouldn't it be ironic if the Fed actually had it right and panicked because the economy is in fact tanking?

Editor's Note: Want more of Jeff's insight and trading ideas delivered to your inbox daily? Minyanville is proud to announce that we have launched Jeff Cooper's Daily Market Report, complete with Jeff's day trading and swing trading setups. Email Josh Sander for more details and how to sign up.
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No positions in stocks mentioned.

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