Good morning, and welcome back to the fantastic world of flickering ticks. Today's session wraps up a wild streak of price swings, and the action over the next nine hours will dictate whether this week will be deemed a success. Indeed, there's a lot of trading left to be done, so wipe that sleep out of your eyes, roll up those sleeves, and let's dive into the muck. We fire up our eight screens to find the global markets dancing to the upside on the back of yesterday's spirited stateside sprint. The European Bourses are getting jiggy to the tune of three to four percent and, are you sitting down? The Japanese Nikkei has actually logged a positive session! Wasabi!
During yesterday's daily digestion, we walked through the possible scenarios and debated the merits of "The phases of Eve." The trick, in my mind, is weighing the potential between the beginning of the denial phase (bullish) and the early stages of the panic phase (bearish). As you know, I've opined aloud that I felt there will be a stiff rally between now and year end---the caveat is one of timing. Is this "THE" rally or is this "A" rally? My "gut" is it's the latter, but our goal is to balance the probabilities such that you maximize the reward given your incremental risk.
This column is not an advice sight and you won't find "answers" in these pages. What you will find is a comprehensive walk through the various crosscurrents and an honest discussion of the elements affecting the price action. There will be times that I'll offer a view, but mostly I'll offer alternatives. How you decide to fish is ultimately your decision as you are the one who must live with those choices. We all trip sometimes---our goal is to stay on our feet and maintain balance until a better tape is found.
With fresh economic data and a truckload of information approaching, clarity and lucidity will serve us in good stead as we trudge forward. Next week's avalanche of news will make these previous sessions seem tame, so factor that into your capital commitment decisions in the hours ahead. As I'm apt to say, it's not necessary to play every move...it's only necessary to have a high winning percentage on the trades you choose to make. At the end of the year, we're judged by our wins minus our losses. Limiting the latter will only enhance the former.
Our old friend Beeks will swing by Minyanville this morning to deliver the crop report. Current expectations call for a Producer Price Index reading of 0.2% (Less Food & Energy 0.1%) and Advance Retail Sales of -1.2% (less autos 0.1%). As an extra treat, the University of Michigan Confidence number will be released at 9:50 EST and current expectations there are for a reading of 85.5. I'll tell ya, those Wolverines have all the fun! Meanwhile, General Electric just released their earnings and the analyst community is feverishly digesting the quality of the numbers. Keep in mind, please, that much of this information was already discussed in their analyst day a few weeks ago. Also, during this morning's business, Lehman brothers upgraded IBM so watch that name for signs of traction.
In Level land, we traded up to our initial resistance zones yesterday (S&P 810 and NDX 850) and did "some work" there. If the Minx can push through these price points, watch S&P 820, 850 and (especially) 870 and NDX 900 as the next levels of contention. It's been a long week, but we've got one more day so choose wisely and make it count. Before you know it, we'll be brunching with the family and enjoying football with our friends. Let's look back to this day with a smile on our face and jingle in our jeans.
Have a great day.
Long GE calls, short GE common, long QQQ
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 email@example.com.
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