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Monday Morning Quarterback: What's the Good News?


If bulls hear what they want, a rally could ensue.


With a quickly missed weekend in the rear-view, it's time to opine on the action anew.

There's a lot going on for a summer Monday. Not only do we have thousands of hedge funds standing in a circle shooting at each other, we've also got expiration hangover and the implementation of the Braveheart short-sale rule.

On Thursday, we offered the Jump-Test-Run-Rest scenario. In other words, following the prior three sessions, Thursday's tape jumped higher, tested (the Wachovia (WB) raid), ran into the bell and, with a litany of overnight earnings (Merrill (MER), Microsoft (MSFT), Google (GOOG)), rested into the weekend.

The reaction to news is more important than the news itself, we know, and it's quite possible that we'll need to see good news rather than news that wasn't as bad as expected to further spur the herd. With hundreds of companies reporting this week-including Apple (AAPL), Texas Instruments (TXN), Caterpillar (CAT) and Yahoo (YHOO)-perception will be key.

We have some room left in the mean-reverting rally, mind you, but the easy trade, as they say, has passed.

Some Random Musings:

  • I wrote a column called The Future is Now offering that the big picture blues we've been eyeing in Minyanville for the last few years have finally arrived.

  • On cue, Fed Chairman Bernanke finally acknowledged them, paving the way for the biggest financial rally in history.

  • I pared my long exposure and, with the exception of a small Google short (sold half into $480, looking for $450 but will use a trailing stop), entered Friday's ride with a relatively flat book).

  • One of our Ten 2008 Themes was the other side of zero percent financing, or the financial crisis morphing into an economic, consumer-centric one.

  • PIMCO's Mohamed El-Erian was on FBN Friday talking about just that, along with a litany of other topics that Minyans know all too well.

  • He also said "We tend to think in existing paradigms," which is another way of saying that historical precedence need not apply.

  • We may have room to the upside but remember, Minyans, the stylistic approach in a bear market is to sell rallies just as one would buy dips in a bull market.

  • Hey Braveheart, there are upwards of $1.4 trillion of equities now on load, which is about 33% higher than the start of 2007 (Spitalfields Advisors).

  • If I were one of the banks left of the Fed's Keyser Soze list (protected from up on high by the Prince of Darkness), I would be extremely upset.

  • If you haven't read Pep's Guide to the Stealth Depression, please print it out as it's not to be missed.

  • Please soft-circle Friday, December 5th for our annual Festivus for the Ruby Peck Foundation for Children's Education.

Good luck, friends-trade like a Minyan today!


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