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No Fear Left On Wall Street

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Tuesday's whiff of panic, with stocks coming apart like dime store toys and a flight to quality in bonds, turned around miraculously like Moses parting the Red Sea.

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Take back your Iranian torture
and the apple in young Steve's eye
Yea, take back your losing streak,
check your front wheel drive...
Tom Petty (Jammin' Me)

While it is never ever a good idea to minimize the M word, Momentum, and that is the last thing I want to do, at the same time it is just as important to observe the other M word, Manipulation, when it stares you down.

That is why I said yesterday that it was "do or die, and "all in" and that a move over the 1520/1521 pivot telegraphed a new high dead ahead: after the rubber band was pulled back, the hook put in and the needle threaded on Ugly Tuesday, a breakout above the triple tops at 1540 beckoned.

As my father used to say, the market doesn't move, it is moved. Not many people go broke in the market and make back three times what they lost as did my dad. He didn't have a lot of advice so when he spoke I listened eagerly because not many people go as many rounds with the Creature from Tape Town and live to tell about it. Or at least they don't want to talk about it.
I don't use the word "manipulate" cavalierly any more than I flip the phrase "financial panic" off the cuff.

Maybe it is just coincidence that after the market closed at 4:00 PM on Wednesday afternoon the futures popped up just as, as I understand it, The Working Group concluded a meeting.

Oh, pshaw, that's just paranoia, Cooper. Why would the Big Dogs think that the supprime slime could be the mother of all bannana peels for the Gorillas in the Mist? Why would the Big Dogs be concerned at the Lions of Leverage growling? Why would the Big Dogs be concerned about the Derivative Dinosaurs?

Suffice to say that for market participants as a whole, facts are something of a Jurassic Park:

There is often an embargo on the truth as to how close things come to being systemic risk until after the fact.

Such was the case in the 1987 meltdown and the LTCM debacle.

Tuesday's whiff of panic, with stocks coming apart like dime store toys and a flight to quality in bonds on a one-two punch of poor earnings reports and an unstandard Standard and Poor's subprime warning, turned around miraculously like Moses parting the Red Sea.

Perhaps they should rename it The Proactive Working Group.

As I said yesterday, believe what you see, incredulous as it may seem.

As Lord Keynes said, "When the facts change, I change my mind: what do you do, sir?"

Let's just say when momentum changes, as traders we must change our mind despite our intellectual proclivities.

There is momentum and there is opinion and sometimes the twain don't meet. As a trading buddy of mine said the other day, " In this game, hope sucks."

Believe what you see. In fact, the recapture of the 1520/1521 pivot paved the way for nothing short of a new high on the S&P.

In fact, as anticipated, it was "all in and do or die" . The Boyz had an agenda and set it up from where I sit. It appeared to me that a move through 1520/1521 was bound to trigger what I call a Rule of 4 Breakout, or a breakout over tripple tops. Bulls and Bears alike saw the tea leaves, held hands and did an Irish jig and a Chinese firedrill at a Jewish wedding.

The move had nothing to do with any ostensible sustaining catalyst, with sustainability of earnings or the sustainability of low interest rates or the perception that all's well that ends well for the denizens of debt.

I was always taught to buy fear and sell greed. One thing is for certain: if there was any fear left on Wall Street it was obliterated on Thursday.

If there was any doubt as to the invincibilty of the market it has been vanquished.

That is why breakouts are often times the most dangerous time: after a long persistent run they have a better than average likelihood of being a crescendo rather than the beginning of something: a culmination, whether it be three days or three weeks.

Consequently, any big momentum to the downside that offsets Thursday's price action will be a red flag.
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No positions in stocks mentioned.

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