How is it possible that one week finds us with such a negative view on the economy and the stock market, and the next week finds us doing an about-face? As all the great traders in history illustrate, stubbornness and pride are dangerous personality attributes to have in our business. 2010 has illustrated, almost weekly, the need to be nimble and rent positions, long or short. Last night I was reminded of the dangers of being too proud during a visit my Number 2 and I had with my parents, at their home in Bay Ridge, Brooklyn. After a little evening lemonade, sitting in the gazebo in their garden, it was only a matter of time before my father pulled out some stories from the old country.

You see, my father had an uncle named Fuad, and Fuad in his bachelor years was a bronze Adonis, and proud to a fault. He was extraordinarily handsome, if not (as you shall soon see) the sharpest knife in the drawer; nearly everyone in his village admired him (the girls, his friends, and many parents).

Also, in this village was a prominent family who had a daughter named Suha. I don’t know quite how to say this, so I imagine I just need to spit it out, and hope you all will forgive the politically incorrect and horrifying nature of my ancestry. Here goes. As per my father, Suha looked like a spider. She was hairy like a beast, with long, sinewy limbs, and not a curve to be found. Her personality was worse, and hardly a person in their village could imagine a more distasteful experience than sitting opposite her and being forced to converse. Suha was not a catch, and her family worried about finding her a husband, as families did in those days in the old country. Suha’s family made many an approach to the families of eligible bachelors, yet they were unsuccessful in their quest to find her a husband. After much hand wringing, scheming, and family conferencing, Suha’s Uncle Anwar came up with an idea.

He paid a visit to proud Fuad, telling him, “There is an ugly rumor going around that you asked Suha’s parents for her hand in marriage, and they turned you down in disgust. Is this really true?” An outraged Fuad replied, “Of course this rumor is false, and how dare they show disgust at the thought of my marrying Suha? Who do they think they are? Do they not know me? I am Fuad! I am the catch of the village! I shall show them.”

Fuad stormed away and right over to Suha’s house. He proceeded to ask Suha’s parents, incredulously, if they really wouldn’t accept him as a husband for Suha. Her parents were taken aback, as Fuad followed up with the demand that he be given Suha’s hand in marriage. They replied, “As you wish.”

Too much pride can get you into trouble, whether in trading, in your beliefs, or just in dealing with my extended family overseas in the old country. Remember that!

P.S. – my father, last night, also told Number 2 and I about two distant cousins of his, boy and girl, who fell in love, were told they could not marry, and so agreed to take poison to end their lives on a predetermined date and time, apart from each other. She took the poison; he didn’t. I couldn’t figure out how to tie that into the current market environment, and so you got Fuad. Please accept my apology.

Yesterday the market was marginally higher, shaking off an early morning spike downward. Volume was again anemic, with some desks reporting 25% decrease in equity flow versus already anemic 20-day average, during earnings season no less.

Advancers outnumbered decliners 3-1, with all sectors advancing.

13 weeks of Equity Outflows, PIMCO seeing deflation risk, China thinking about a 60% housing bubble crash, Paulson turning negative….

Versus:

With 80% of the S&P 500 having reported, 75% have surprised higher.

Pick your reality.

Where we left off 4:00pm EST:

INDU                      10,680.43                            +44.05

SPX                        1,127.24                                +6.78

CCMP                    2,303.57                                +20.05

Futures now at 7:30am EST:

DJA                         +16

SPA                        +1.20

NDA                        +3.25

Key Data out today:

08:30:                     Initial Jobless Claims (455,000 expected)

08:30:                     Continuing Claims (4,515,000 expected)

10:30:                     Natural Gas Inventories

Since yesterday’s close, some key stories:

–          ICI reports 13^th week of US Equity Outflows as markets continue to melt up.

–          John Paulson turning bearish again.

–          Bank Of England keeps stimulus in place.

–          China: new stress test implies a worry of a 60% drop in housing prices.

–          BP to start pumping cement to seal oil well .

–          California Same Sex Marriage Ban voided by Judge.

–          Wheat soars to nearly a 2 year high.

–          A-Rod hits 600^th home run.

–          D-Rod (Dick Bove) makes 700^th flip about Goldman Sachs’ Prospects this year.

–          Barnes and Noble draws private equity interest?

–          Pimco’s El-Erian sees 25% chance of US Deflation, and Double Dip Recession.

–          Lamborghini CEO mulls 4 door model to compete with Maserati, Porsche, and the Civic.

Significant Movers This Morning:

KLIC +15.2% (earnings), SOLR +13.9% (earnings), MIPS +10.1% (earnings), RGS +8% (strategic alternatives), ATML +7.7% (earnings,), PPO +7.4% (earnings), NSIT +6.5% (earnings), VLNC +5.7% (earnings), TSCM +5.5% (earnings), AMKR +5.1% (earnings), ISTA +4.4% (earnings), TWER +4.3% (earnings), NWSA +3.5% (earnings), TWO +3.3% (earnings), SMSI +3.2% (earnings), EGLE +3.1% (earnings). IKAN -17.7% (earnings), CNW -9.9% (earnings), UNTD -8.9% (earnings), AINV -4.6% (earnings), JACK -4.3% (earnings), HOTT -4.1% (July comps), GOV -3.8% (7M share secondary), HIG -3.7% (earnings; mixed shelf), GCA -3.5% (earnings), IPI -3.2% (earnings), MELI -3.1% (earnings)

Today’s Earnings

– Pre-open: AFE, CAH, CI, DNR, EIX, FWLT, IFF, PCS, PPL, TDC, TWC, VIA.B, WIN, WDI, ED

– After close: ATVI, CF, EOG, KFT, MCHP, PKI, PSA, SWN