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The Cat's Meow: Positioning Into Quarter-End


A little perspective goes a long way.


We often talk about how the reaction to news is more important than the news itself. While we're referring to the stock market, it also applies to life.

We received tragic news on the feline front Sunday when we learned that Blue, our 8-month Abyssinian, became entangled in window blinds and was pronounced dead shortly thereafter. He was just finding his stride as a cat, and it was a punch to the gut as far as those things go. With Phoebe on her 16th year and Crash in his second, the little one was as much for Crash as it was for the rest of our family.

Interestingly, and perhaps not surprisingly, the news shook me up; while my defense mechanism immediately sought to post-rationalize what happened -- he was just a cat, I've got a healthy newborn daughter, superb seven-year old twins, and a great gal -- a loss is a loss and it leaves a hole. The ability to feel is a gift, I know, and this was the other side of that trade.

Last night, before I stepped out for a business dinner, I took the twins to the kennel, where a particularly precocious kitten captured our fancy. I wasn't planning on making a trade -- I didn't want to disrespect Blue's memory -- but the kids were smitten and so was I. "Petty," named after one of our favorite musicians, joined the clan and immediately made himself right at home.

The reaction to news indeed; what was a hole is now a gateway, and the grieving has morphed into a celebration. I'm sure Blue would have wanted it that way, and it was a lesson I was happy to share with the kids. One door closes, another door opens, and so it goes...

Oh Yeah, the Tape!

If you haven't thrown up in your own mouth from all this human interest drivel, I'll subtly shift to the reason you're likely reading this content, our take on the tape. We're human and sometimes that shines though, which is alright as long as we take care of business. So, in an attempt to justify your time, I'll dive right in, in no particular order:

  • I got as close to a rant as I've ever ranted yesterday -- sans the curious case of Franklin Raines -- and had a "Network" moment. I felt like screaming, "I'm mad as hell and I'm not going to take it anymore!"

  • Why? The Role Reversal of Government and the Big Banks, and what it means for the rest of us.

  • This came on the same day as 1) Tossing the Greek Salad: What Austerity Means for the Markets, which posted on Minyanville, and 2) The Most Important Point in Market History, which was a revised Minyan vibe that posted on MarketWatch (and it was nice to see it ranked the #1 most read article in the MarketWatch network).

  • I share these links in case you missed them and as a context for our forward discussion; to understand where we are, we must appreciate how we got here.

  • And if you really wanna learn about how we got here, check out The Upside of Anger, which illustrates the evolution of the financial crisis as told through the eyes of Minyanville's forward-looking lens.

  • The Cliff Branch in yesterday's tape was the financials. We tagged Goldman (GS) as the super-tell and sure enough, it bent but didn't break and the broader tape took solace in that.

  • Still, I'll draw your attention to the second of our Three Keys to the Stock Market -- the lower highs -- and note that the S&P is now testing the downtrend from the May high, which coincides with the 50-day moving average at S&P 1317.

    Click to enlarge

  • And there it is. As I'm writing and the market opens, Goldman, Morgan (MS), Wells Fargo (WFC), Citigroup (C), and AIG (AIG) are all flipping the crimson switch. As go the piggies, so goes the smoke (BKX 50 remains an important resistance, if and when).

  • Have I mentioned that the rallies have occurred on very light volume, which is a technical negative as well?

  • While my sense is that the 'games people play' into quarter-end have already been played (the 'other' legacy of Eliot Spitzer), respect the unforeseen currents that could still exist, not only into the end of the second quarter, but the end of QE2 and the third quarter posturing that will also be in play. In short, there are a lot of moving parts here, so position yourself accordingly.

  • Lemme get this to you in a timely fashion. Hit 'em hard, Minyans, and remember, profitability begins within.


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