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Hitters and Shooters


The base metals are base jumping!


Well, beat the drum and hold the phone
The sun came out today!
We're born again
There's new grass on the field.

(John Fogerty)

Good morning and welcome back to the sleepless shack. It's been a long night in the city of critters as earnings and baseball provided some jitters. We're thus far alright (or so it appears) as fans of both sports have started to cheer. "We held where we had to and earnings were fine," said Hoofy the bull in a bit of a whine, "the pressers were guessing we'd get a decline but that wasn't in the minxy design!" Will a tradable bounce become more pronounced or are Boo and his crew preparing to bounce? We'll know soon enough as we get a good jump and ready ourselves to mount today's Hump!

Thank goodness for earnings if for no other reason than we don't have to hear the word "oil" every six minutes. While equity traders have keyed on the black and blue spigot spew, it's become the reason du jour for anything related to the financial tape. The backdrop of higher energy prices matters (implicit tightening) but it's not the only determinant of the price action. It hasn't "really" mattered during this last leg up and we'll need to remember that fact when it eventually dips lower.

So what will happen if we see an oil slick similar to, say, the action in the metals over the last coupla days (please note that the base metals are getting slammed today, led by nickel's 15% drop). The knee jerk reaction will likely be a collective "phew!" from the bulls and a simultaneous "oy!" from the bears. I will simply ask ye faithful to recognize that a slew of other elements will likely merge into the trading mix as earnings, the election and the attendant two-sided risk manifest. In other words, be careful what you assign as causation in this tape as the scope of influence is multifaceted.

Speaking of which, the Mother Chip (INTC:NASD) reported last night and it wasn't as bad as some had feared. While gross margins were a bit punk, they wrote down some inventory and squeaked out the revenue number. The composition of the earnings is open to interpretation and the commentary was "hopeful" but trading is a juxtaposition of perception vs. reality. And in the context of this conversation, Intel serves as a microcosm for the market as a whole.

The technical backdrop should help influence the collective decision making process today. S&P 1120 (200-day) held yesterday and that put the pep in the Matador step. And now, with the early indication of the futures markets, NDX 1440 (200-day) will be similarly probed. Those bookends will serve as a primary framework as BKX 100, XBD 130, CYC 700 and RUT 570 provide the technical periphery.

There's lots going on and traders are likely working on limited sleep as a function of last night's thriller in the Bronx. It's hard to imagine a series better than last year's ALCS but if game one is any indication, this is gonna be special (you gotta feel good for Mo). No disrespect to the Cardinals or the Astros but there simply isn't a better rivalry in sports. And yes, I say this fully aware that my beloved Raiders host the dreaded donkeys at the hole this weekend!

Good luck today.


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