Drums and Space
The tape won't break out until there are enough non-believers!
The earnings parade continues to march ahead and, while the Magilla Gorillas remain in our midst, the releases thus far have been underwhelming. Sure, there's been a little something for everyone but, remember, the (expectation) bar was raised as a function of the recent rally. If these names don't deliver, they've got room on the downside.
With that said, the most important news of the week remains in front of us. MSFT, IBM, GE, EBAY, SUNW...if these big apes share a theme (either way), the Minx will react in kind. The broad tape was a kitten's whisker away from breaking out yesterday but didn't have the oompha to push through. Traders are looking for a catalyst and, make no mistake, the bulls are hoping that tonight's earnings are it.
The technical landscape continues to flash warning signs--stochastic sell signals, head and shoulder formations (SOX!), complacency--but the looming breakout seems to be all that players are focusing on. When I was a young buck at Morgan Stanley, Jack Skiba once said to me (referring to technical analysis) "Never anticipate the anticipator." It was a valuable lesson--never attempt to front run a technical formation...it's a recipe for disaster.
Beeks just swung by to announce that jobless claims were less than expected and the morning futures have lifted their head. While we must always appreciate the potential for a collective psychology shift (economic recovery), this number (in and of itself) not that meaningful. It's a piece of the puzzle, mind you, but our puzzle has a lot of moving parts.
Today's tells include the internals (have told the tale all week), the semiconductors (dandruff alert continues), the brokers (sentiment), storage (on the heels of QLGC earnings) and the retailers (consumer proxy). On the charts, S&P 922 is 'a' level (see five day chart) but the 930-940 is THE resistance (November highs). On the downside, 910, 900 and 875 are areas of support. In the NDX, 1125 is the first real resistance while NDX 1050 (remember that level?) is support.
I continue to dance with two legs in my metaphorical bear costume (50% conviction on the short side) and, as a function of discipline, will look to remove an appendage out if we get some decent slippage today (ahead of tonight's earnings). One step at a time, my friends, as we try to find solid footing. Speaking of solid feet, the man with the plan, Tony Dwyer, will be gracing our television screens his morning on CNNfn. Tune in at 9:30 EST to see Snoop Tone do his this with that Minxy Minx, Rhonda Schaffler. Daisy....settle down!
See you after the opening.
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 firstname.lastname@example.org.
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