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Hoofy and Boo in the Crossfire


Consumers caught in the crossfire between lovie dovie govie inflation statistics and the high price of gas in the tank, food on the table and kids in college.


Tooth for a tooth, eye for an eye…sell your soul just to buy buy buy
Beggin' a dollar stealin' a dime…come on can't you see that I
I am stranded…caught in the crossfire
I am stranded…caught in the crossfire

--Stevie Ray Vaughan (Crossfire)

Things that make me go hmmm…

  • Consumers caught in the crossfire between lovie dovie govie inflation statistics and the high price of gas in the tank, food on the table and kids in college.

  • U.S. growth at a four-year low while the DJIA is at an all-time high and the S&P a few good buy programs away from its all-time closing high of 1527.

  • With little sign of corporate inclination to rev up Cap-Ex are corporate buy backs a function of nothing else to do with the moolah in the till? Or given the M&A melt-up, LBO lunging and private equity escapades are the corporate lounge lizards just trying to couch their cushy jobs by shrinking the floats and manipulating the earnings per share to avoid possible takeovers? Does shrinkage in the case of Costanza have anything to do with performance?

  • Do I need glasses or is there a letter "I" on the end of CMG (Chipotle Mexican Grill)? In 2000 it was CMGI. In 2000 it was wafers - now it's waffles?

  • In years to come will we look back and see that the Zell Sell parallels the Rockefeller's sell of Rockefeller Center to the Japanese prior to the 1987 stock market crash? The Rockefellers later bought it back – at a discount.

  • A few days ago state-run newspapers in China ran cautionary stories about the risk inherent in stocks - that stocks can go down as well as up. When asked whether there was a bubble in Chinese stocks, the governor of the People's Bank of China answered flatly "Yes."

  • Odd how this is reminiscent of comments by the New York Fed about a week ago about the current level of risk in hedge fund leverage. Are the People's Bank of China and the People's Working Group sharing fortune cookies? Are they both concerned about a reversal of fortune, cookie, having opened a Pandora's Box of liquidity?

  • The Big Dogs have bellied up to the bar. With the punchbowl spiked is it any wonder that no one believes the bartender when he whispers closing time?

  • Is the new Chinese favorite pastime speculation? Will Americans and Chinese be the boys of summer and meet on the fields of speculation this summer? Has gambling in stocks replaced gambling in casinos in China? Is this why Las Vegas Sands (LVS), Wynn Resorts (WYNN) and MGM Mirage (MGM) are rolling snake eyes lately?

  • The NASD sent a fortune cookie out last week – alerting investors regarding the risk of margin. According to the NASD, through the end of March the amount of debt taken on by investors to buy stocks totaled 317.7 billion. This is a tad below the 321.2 billion record scored in February, but both months surpassed the 300 billion hit in March 2000.

  • How is it that the Fed is jawboning about inflation while they're pumping money hand over fist? Is the jawbone connected to the wrist bone?

  • Does the halitosis in Google (GOOG) gargling below its 50 DMA indicate anything?

  • Does it mean anything that the longs in my poster child for this year, Terra Nitrogen (TNH), had to bring out their gas masks on Monday? Someone certainly pulled the finger – uh trigger on their position on Monday. TNH gapped up towards par but closed at 85.65 down over ten points on the day. Sometimes even Coop de Ville gets one right. It's pin the tail on the option donkey time again. Watch those strikes.

  • Speaking of which is it just me or y'all seeing how the S&P is caught in the crossfire at 1500? Thursday's low was 1491.45, while last week's high was 1513.80. The midpoint, 1502. Monday's close 1503.15. We remember our 1498 pivot and watched how it supported the S&P on Monday. However the Second Mouse may get the cheese for Boo. (Not to mix metaphors with TNH.)

    A 10-minute chart since a week ago Monday shows the S&P may be carving out a short-term Head & Shoulders Topping Pattern. Why bother with such a short-term pattern?
    1. It is Options Expiration week
    2. 1498 squares out the October 2002 low
    3. The March 2003 test low was approximately 1515 days ago at last week's high

  • A trader friend of mine who is a smart owl when it comes to options tells me for the first time in almost a year there is no upside premium in the 151 SPYDER strike. That doesn't mean the market has to go down, but if we break 1498 the expiration may be for sale. Keep an eye on the 1490 and 1480 S&P levels.
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Position in WYNN, TNH

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