Randoms: Road Signs

By Todd Harrison  JAN 19, 2010 9:55 AM

History doesn't always repeat but often rhymes, and it remains to be seen if Dr. Seuss has the juice to sell the earnings news.


“And the sign said long haired freaky people need not apply. So I tucked my hair up under my hat and I went in to ask him why.”
- Tesla

A new week is upon us, one that will be flush with earnings galore. With Intel (INTC) and JP Morgan (JPM) in the rear-view mirror, Citigroup (C), IBM (IBM), Bank America (BAC), Mother Morgan (MS) and General Electric (GE) will offer up their latest state of the union.

As we ready for a fresh set of fundies, the technical construct is gaining mind share as a confluence of price points -- and the measure of time -- commingle. While this metric is just one of our four primary guides, it offers a helpful context with which to measure risk.

Perhaps the most obvious element is the downside gap created on the first trading day of the decade after the New Year champagne pop. These vacuums have a tendency to “fill” and should S&P 1127 breach, it “works” to S&P 1115.

Not to be forgotten, S&P 1120 is the top end of the Q4 trading range that served as resistance and, once broken, morphed into support. Combining these lenses and drawing lines with crayons rather than pencils, we arrive at S&P 1115-1120 as the first primary support zone.

Interestingly, the bottom of the aforementioned range -- S&P 1080 -- is the same support found in the upside trend channel that’s been in play since the summer. As you might expect, overlapping levels lend to their strength, whether folks follow them because they work or they work because folks follow them.

Meanwhile, courtesy of the Department of Synergy, this past Friday January 14th 2010, was oddly noteworthy. Why? On January 14th, 2000 precisely ten years prior and 1000 points higher, the DJIA topped -- and reversed lower -- at a level that coincided with a Fibonacci retracement level.

History doesn’t always repeat but often rhymes, and it remains to be seen if Dr. Seuss has the juice to sell the earnings news. This tidbit is interesting, however, as long as we remain conscious that bottoms are usually points and tops are typically processes.

Some Random Thoughts:


Position in S&P

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

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