A Day For Heroes

I wanted to write a short commentary this evening for those of you who were
not able to catch my appearance on Jon Najarian’s weekly show, “The
Traders,” on WebFn.

Well, when you woke up Thursday morning and looked at the futures you would have
thought that the United States had a sudden breakout of prosperity overnight.
In actuality, the pre-market tizzy was brought about by a European rate cut,
and the handiwork of semiconductor analyst Jay Deahna of Morgan Stanley
(to be referred to as “Mr. Hanky*” in this column from this point
forward). His pre-market “The Train Has Left The Station!!” panic-buy “call to arms”
this morning was truly one
of the biggest pieces of turd I have ever seen fly out of a major house. I am
completely
flabbergasted at the audacity of analysts like Mr. Hanky to deliberately capture
the headlines
and whip the unsuspecting public into a buying frenzy on no fundamental
justification whatsoever.

Perhaps some of the volatility that the Nasdaq wishes to curb can be
attributed to analysts continuing to set price targets, and using language
that is intentionally designed to create an emotional overreaction. In the
long run, it is the trusting, unsuspecting private citizen who is hurt by
this type of activity. Interesting as well, Lewis Borsellino’s
“Teachtrade.com” today reported early in the day that no other than
Morgan
Stanley was the lead seller of Nasdaq 100 futures in the pits. Amazing,
isn’t it? According to Mr. Hanky, the train had left the station but his
firm’s futures traders were selling their longs all morning. By the time
the trading session ended Thursday, it was clear that Elvis may have left the building long ago but Mr. Hanky’s train had certainly not left any such
station.

In a massive fade from the opening limit-up, the Nasdaq 100 futures
closed nearly 100 points off their intraday highs, and the NDX cash closed
nearly 90 points off its opening high.

(Please refer to the chart of the NDX that Carolyn Lueck used
in her
commentary last night). The NDX is now clearly in pullback mode and should
continue to correct. The fact that the semiconductors and other techs sold
off so precipitously from the open certainly underscores the fact that this
market can no longer go up without some profit taking. In addition, I
believe that just as a market that is on its lows fails to go lower when it
is subject to bad news (indicating a short-term bottom) a market that fails
to go higher when it is pumped by “good news” certainly indicates a
near-term top. As such, John Chambers’ inability to say anything that had the
slightest amount of forward-looking nature to it may have been just the thing
to create a bit of uncertainty again. And, believe me, the perma-bulls hate
nothing more than uncertainty.

*Mr. Hanky is a character from Comedy Central’s “South Park”

P.S. My trading colleague Paul Wood realized he can throw 95 mph this
morning…..as he delivered his television remote control squarely into his
Sony Trinitron after seeing the futures limit-up this morning. Hope Sony
gets you the replacement soon, buddy.