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Achtung Baby!


Is it getting better?
Or do you feel the same?
Will it make it easier on you now?
You got someone to blame

Heads up from across the pond, my friends. DaimlerChrysler (DCX) released their earnings report and the German DAX is getting Daxxed to the downside...and taking the rest of Europe with it. Blimey! Keep an eye on these overseas indices as a potential sentiment gauge as we prepare for a battle of our own. Stateside, the overnight news flow was skewed to the negative as earnings (by and large) came in light and the ABC consumer sentiment index registered its lowest reading since 1994. 1994? I still had hair!

As discussed in my first post, there are many crosscurrents in play right now and, to be honest, the short side almost seems too easy to me. Obviously, we'll find out soon enough and it will be interesting to see how the market digests this second dip and this latest round of bad news. Keep an eye on the banks in general and Citigroup in particular. The BKX stochastics are pixels away from a sell signal and the first support resides at 730. In semiconductor land, the recent data points have been abysmal but the group is heavily shorted. Support resides around SOX 238. Peripheral tells today include Cisco and Microsoft (bellwethers), Walmart (consumer proxy) and, of course, the internals.

The structural and psychological metrics will be the determinants of today's price action and we'll once monitor the fixed income market. Yesterday, for the first time in a while, bonds and Spoos (S&P futures) decoupled, so understand that this relationship isn't a given. There's been a lot of chatter that the bond market melt implies a "look through" that the economy will soon pick up--but if that's the case, wouldn't corporates rally in tandem with the Govies? Things that make you go hmm...

With the stochastics where they are, I wanted to toss out some other support zones for ya'll to put on your radar. S&P support is at 875 then 850-855, NDX support is 950 then 900, Dow Jones support is 8100, DRG (drugs) support is 290ish, BTK (biotech) support is 330 and XBD (brokers) support is 385ish. Obviously, with seven hours to go before the closing bell, most anything can happen so keep your wits about you and your right hand up.

Lots going on and lots to digest...but we'll need to save some room in our belly. That's right, sports fans, it's a special hump day edition of SushiWednesday here in Minyanville and the critters are lickin' their chops. Wasabi!

See you after the opening.
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