Saddle up Sally!
There's more earnings than I can shake a snake at!
Good morning and welcome to the horse course. We awake this morning to find the fields of green covered with a spew of dew. Empowered by Intel's (INTC:NASD) solid quarter, the bulls are out, the bears are in doubt and traders are wondering what it's all about. Is this the edge that Hoofy needs to ride the Minx and sow the seeds? Or is this the news that'll light the fuse and set the stage for an ursine bruise? It's Hump Day in the city of critters so punch that doggie and shake those jitters!
Hoofy, for his part, doesn't see the need for a critter debate. The sector indices (banks, brokers, semis, transports, cyclicals, Russell 2000) all seem to be breaking out,the earnings are solid (as widely expected), performance anxiety is rampant and, hey, CNBC reported that one of the smartest technology hedge fund managers in the world--who's been bearish for years--has recently climbed aboard the upside express. Hoofy, and his rose-colored glasses--would offer that NDX 1500 is the "easy" trade.
The momentum (and mojo) surely seem to support that view but there's something in Boo's gut that won't quit (other than the constant nausea). When he feels this lonely (Investor's Intelligence: bulls 57.6 vs. 55.9 and bears 19.8 vs. 22.5), the bell curve is so stacked (to the right) and there's zero fear, the backdrop for a trap door is firmly in place. As a guide, he'll be carefully watching S&P 1050 (broadening top) and S&P 1060 (38.2% Fibonacci retracement of bear market). If the bulls can push decidedly though those levels, Boo's blues will likely continue (allowing for a little jiggle room).
A couple of quick thoughts before we dive head first into the muck. First, it's expiration week and that always tends to exacerbate volatility (both ways) as traders chase their negative gamma. Most of that action typically takes place the week OF expiration (rather than the expiry itself) so stay alert for swinger city. Also, pay close attention to the chip equipment stocks (semicaps) for IF (big if) there is a reversal out there, it'll likely spawn from this sector. (The banks will also tell the tale as they've been bone dry and, as we know, they're the most influential sector in the marketplace).
Most important, please check your emotions at the door before stepping onto the playing field. While it's true that this is an emotional tape, that doesn't mean trading with emotion is warranted. A lucid thought process and proactive (yet adaptive) strategy is the recipe for success. There's gonna be a fair amount of capitulatory action this morning. That doesn't necessarily mean that the supply will become motivated (it hasn't been) but it remains a possibility.
Finally, I would like to take a poll and see where that poor Cub fan should move. If the curse of the Cubbies is alive and well, that bespectacled fella is the new poster child of frustration. Hey, if nothing else, he allowed for more post-season baseball and that's always a good thing. Let's just hope that it's the last game seven we see for a while. Go Yanks....and go steady.
Good luck today.
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.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter