A Request

12/18/08 2:15 PM EST

As of: SPX 1045 HELP  ARCHIVE

I have to beg for your indulgence.  This is highly unusual of me, but I hope you understand.

First, some background.

My wife and I had a hard time conceiving our first children.  Partly because of her age (upper 30's at the time), it took a long while for us to be blessed with a lasting pregnancy.

Ultimately we were.  But at 28 weeks - 3 full months before my wife's due date - she gave birth in what was the scariest moment of my life.  Until today...but more on that in a bit.

She gave birth to twin boys, and with such a premature delivery, they weighed just a smidge over 2lbs.  After a few days, they were down to 1lb and some ounces, literally fitting entirely in the palm of my hand.

The smallest one, with the least chance for survival, ultimately did and is doing great.  Our other boy couldn't fight through, and we lost him.

It took us awhile to decide if we could try again, which we did.  We had a daughter five years ago.

Something during the process didn't quite fire as it should, and she was born with an exceptionally rare genetic condition called CDLS.  That's causing some developmental delays, but other than that we feel blessed that she doesn't have to deal with the medical issues so many others do.

At least that's what we thought.

This morning, while getting her ready for school, she went into a seizure.  I'm not sure if you've ever been through it, or watched somebody who has, but it was the most terrifying experience of our lives.  Watching your baby not breathe, not respond; watching her lips turn blue...it's not something I would wish upon anyone.  After having already lost a child, I just don't know if I'd be able to endure another.

I'm still incredibly shaken up by it.  She's undergoing tests now and by all accounts she should be fine.  We need to watch her even more obsessively than we already do, but that's the least of our worries.

So like I said, I have to ask for some indulgence here.  I'm not really paying attention to the market at the moment, though I hope to catch up and be able to think more clearly later today.  She is going through some neurological testing tomorrow, and I may be out or distracted then as well.

Thanks for your understanding.

Calm Before Expiry, Holidays

12/18/08 9:15 AM EST

Good Thursday morning...we begin the day with some modest buying pressure in the pre-market futures, which have been very quiet today, as have been the early moves in commodities and most overseas equity markets.

Government bonds are once again seeing abnormal buying pressure, though.  As of yesterday, the 30-year Treasury Bond futures had seen 24 days of rising prices out of the past 30, the first time that's ever happened (going back to 1977).  The few times it reached 23 out of 30 days, bonds did ultimately decline over time, but they saw higher prices initially over the next one to three weeks or so.  Those dates were 03/14/86, 12/02/97 and 11/01/01.

I know many traders are salivating over the possibility of shorting this market (yields can't go below zero...or so the theory used to go), and we are seeing some sentiment extremes, but this is a runaway market and as we've had ample opportunity to see over the past decade, runaway markets are very difficult to top-tick with any degree of risk control.  Personally, I'd wait for some kind of major decline in bonds (i.e. a rise in yields), then a failed rally attempt before trying to step in front of the bond market.

There really isn't anything new to discuss in terms of the short-term picture for equities here.  Yesterday saw a narrow-range day in the broader equity averages, which is something we'll probably see quite a bit of over the next two weeks.

The Thursday of option expiration weeks was positive 7 out of 7 times from April through October of this year, but November broke that pattern (and so many others) in a big way.  Generally, these days don't have that much of a bias either way.  Earlier this week, we went over some general seasonality tendencies regarding these weeks, and for the most part it has followed through.

Our most sensitive indicators peaked into overbought early yesterday, but the late-day dip alleviated the worst of those conditions.  Currently, I don't see any short-term edge either way right here...our indicators are most neutral (or at least the bullish ones are cancelling out the bearish ones), seasonality is modestly positive but pretty muted over the next few trading sessions, and technically the indices are trapped in the range carved out over the past week.  From here, I'll expect any poke over yesterday's high to lead to an extension of the rally, and a violation of the low to lead to a move back down towards 850 - 865 (probably the higher end of that range).

From a longer-term perspective, things still look alright.  I keep alluding to a multitude of studies over the past couple of weeks that suggested at least modestly higher prices over the next one to three months (like here and here and here), and those are still in play.