The Most Important Levels of the Year Converge

By Todd Harrison  OCT 25, 2012 10:45 AM

It's do-or-die for the year-end try.



Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

Late yesterday on our real-time Buzz & Banter, we shared:

"The price action leaves a lot to be desired, quite honestly; while stocks hang in there, the tenor is lethargic at best as some important levels come into play. Again, S&P (INDEXSP:.INX) 1375 and NDX (INDEX:NASDAQ) 2650 (the respective 200-day moving averages) are on a LOT of radars and the reaction "in and around here" will shape the tape, quite possibly into year-end.

"While I missed the move yesterday (Tuesday) -- a 30 NDX-handles Snapper anyway -- I'm not so quick to dip my shtick the second time around. Why? A boiling toad comes to mind; the first bounce was intuitive given how quickly we got there (the 200-day). Now, we're meandering toward these levels of lore; conviction levels around the Street appear reactive at best. Talk about performance anxiety -- yikes!

"While we are supposed to get more constructive at lower levels -- and I am, on the margin -- we would be wise to respect the technical damage that has taken place (trend channel break, lower highs) as we map our forward path. I do foresee "N's over S's" (NDX outperformance of S&P) based on the charts below, but I would define risk on any upside tries and treat them for what they are: pure trades."
Those dynamics remain in play as we chew through the Thursday dew; Europe is better bid, as are commodities (despite a flat greenback) and stocks started the session with a green hue. There are some red beans in the green sea -- Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), F5 (NASDAQ:FFIV) -- but today's tape is the bulls' to lose so long as the aforementioned levels hold. Keep it in perspective, however, for a bounce in the tech sector will likely trade to the top of the channel (newfound resistance).

Random Thoughts:

Twitter: @todd_harrison

No positions in stocks mentioned.