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Light House


I think it's almost time for me to take my coat off!


With a boulder on my shoulder, feelin' kinda older,
I tripped the merry-go-round
With this very unpleasing sneezing and wheezing,
The calliope crashed to the ground

(Bruce Springsteen)

Good morning and welcome to the bright light. It's earnings time in the city of critters and that makes for traders who tend to be bitter. As we waffle and wade through the headline parade, each number and input will have to be weighed. Will Hoofy's fat pockets remain in the shade or can Boo pull the plug on this huge masquerade? It's a Hump Day edition of our marvelous mission so settle on in and assume the position!

I had a witty little ditty cued up but decided to shelve it as a function of the early action. This morning's crimson tide is starting to ride and the Minyans among us have things to decide. The trading wires have started to hop and they're getting louder as the futures drop. Is it Merck's (MRK:NYSE) job shirk? JP Morgan's (JPM:NYSE) revenue miss? Rumors of a (well respected) technical service issuing a major sell signal? Underground geopolitical unease? More importantly, for purposes of our discussion, is this is just another bump in a much longer road?

Hoofy has reason for optimism as every dip has led to a larger blip. He'll make the case that most (if not all) of the leadership indices are either breaking out or storing up the energy to do so. Our gracious host, Elmer, has already spiked the punch bowl and investors are enjoying the biggest party in years. But what happens when his cabinet runs dry? If the hangover is directly proportional to the size of the binge, there's gonna be a whole lotta headaches out there.

All major bubbles in history are followed by subsequent "mini-bubbles" that serve to replace pessimism with newfound belief. That's easy to see with the benefit of hindsight (and history) but more difficult to absorb when you're knee deep in muck. After an eight month equity enema, most investors (bulls or bears) are now conditioned to buy dips. That was the intended agenda, mind you, but it has disheartening (and profoundly bearish) implications.

My point isn't to chicken little you to death or urge you to act--this isn't an advice column. I've maintained a bearish big picture tint for almost four years and, at times, I've felt like the dumbest kid in the class. Still, everything in my bones screamed "head fake!" during this rally and while it surely can continue (for a bit), I'm equally certain that it'll end with a whole lotta pain. The unfortunate part is that by this time, we should have already learned our lesson.

Active Minyans can continue to key on the upside resistance (S&P 1050-1060 and NDX 1430-1440), the semis (tech sentiment proxy), the financials JP Morgan and Citigroup (C:NYSE), Microsoft (MSFT:NASD) (in front of tomorrow's earnings) and our trusty breadth. Also keep an eye on Europe (down 1-2%), the macro tells (gold up another $4, the dollar is getting hit) and Fokker. You always gotta keep an eye on Fokker.

On a housekeeping note, I will be visiting with a company this afternoon and my final daily column will post around lunchtime. I will be actively monitoring the Minx, mind you, but my Minyanbilities will be limited. Thank you in advance for understanding as this has been on the calendar for some time.

Good luck today.

position in qqq, msft

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

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.

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