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A Grateful Morning


If I could only get the tape through these levels, the chasers will pile on!


Walk into splintered sunlight
Inch your way through dead dreams to another land
Maybe you're tired and broken, You're tongue is twisted
With words half spoken and thoughts unclear

(Grateful Dead)

Another week has sprung to life and the opening flurry was dominated by one big futures buyers in the pits (north of 1000). As those that have read me for a bit know, I typically view the first half hour as "noisy" as the emotional types do their thing. I'll always respect what I see in the market place but, for purposes of capital commitment, we'll need to be a bit more discerning in the year ahead if we hope to outperform. Remember, it's not about playing every move, it's only about winning the majority of moves we choose to play.

Early themes include stickiness in the semis--although my humble opinion is that you can short the group under SOX 330. BancAmerica also jumps out as this name has been heavy from the word go. When I see an "up" opening with green seas everywhere and a bellwether opens "red," that indicates supply in the market and bears watching. Other than that, the biotechs are trying to shake off the Solly boot, software and storage act dry, home builders act heavy and overall, volume is weak. A quick check of the morning breadth shows winners trumping losers 2:1 in both complexes.

The ISM Non-manufacturing number came in a tad light but the macro futures buyers seem to have caught the "locals" short. These are important levels as the reactive nature of traders seems to have stayed in tact through the holiday season. Again, respect the price action but don't defer to it. If you did that, you'd get bullish higher and bearish lower and that's a recipe for a smack down.

The bullish elements (stochastics, internals) not withstanding, my inclination is to fade this early rally with tight stops ABOVE NDX 1050 and SOX 330. With double resistance looming, I think it's a decent risk/reward profile--as long as you're disciplined if we pop through those levels. Gotta jump such that I can get this post to you in a timely fashion.

I hope this finds you well.

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