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Trick or Treat?

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It must be October, my friends. The leaves have started to shift their hue, the Yank's came from behind on a dramatic post season home run and the great American stock debate has picked up en masse. I'll tell ya, every time the tape stages a spirited sprint, the water cooler buzz starts to focus on whether we're out of the wood this time. While I have my inclinations, you'll never hear me tell you what the market will do. I will, however, walk the path with you as we find our way. Let's take a look.

We fire up our turrets this morning to find Europe's cart following yesterday's stateside stallion and the bourses (as of now) holding onto their early gains (watch that DAX though!).With the drubbing that they've taken over the last six months, some upside "ebb" is to be expected. Their markets, like ours, were deeply oversold. As that condition is "worked off" as a function of the green seas, we find ourselves dancing between the "cusps" of the tape once more. In other words, once a bungee cord is stretched far enough, it's sure to snap back some. How far that "some" is...well, that's what makes our job interesting.

The DELL chatter on the street seems to be focused on them being the best house in a bad neighborhood. While they continue to beat their chest and take share, they really didn't offer us any hope with regard to the overall environment. Yesterday's trading, however, had little to do with DELL. The macro funds seemed to be pressing the short side on the opening (big SPY and QQQ prints), and they walked smack dab into an asset allocation. Now, do I know this for sure? Nope. But it makes sense that managers would wait until the new quarter before shifting around their asset mix.

So where do we go from here? Well, consistent with our goal of looking at the big picture as a series of little pictures, we cast our eyes toward our trusty levels. As discussed yesterday, when the S&P got through the 825-830 zone, it had room to 850 and, perhaps more importantly, 870. In the NDX, lets call 900 a potential level of contention. Now, does this mean that we must trade to these zones? Not on a bet. But these technical levels do give us a backdrop with which to trade our ideas against.

Finally, on a housekeeping note, we want to make Minyanville all it can be for you. As you know, this is an interim site...the town of Minyanville is slated to officially open on December 3rd. In the meantime, we'll be tweaking the particulars of this platform and will ask for your feedback on various issues. Question of the day: Do you prefer the trading thoughts "white on black" (as it is now), or would a more conventional "black letters on a white background" be better? Please email your responses to info@minyanville.com and we'll tally up the results and act accordingly. Thanks!

Have a fantastic day.

R.P

No positions in stocks mentioned


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