Breakfast at Ollies
Europe is bouncing on the heels of Friday's snapper but our market is the horse that'll lead that cart.
Good morning and welcome back to the minxy moxie. Last week's fray was led astray as traders noshed on Boo's buffet. It was contained (if not explained) when the bulls bought dips as they were trained. Will Snapper stick around to shine or is this new lift on borrowed time? This morning, while they ate their eggs, the critters weighed the rally legs. Here's what they had to say:
Sammy: First things first, a big Minyanville congrats to the Florida Marlins. They played with guts, stuck together as a team and deserved to win the series. You've gotta give those critters some snaps!
Boo: I've about had it up to my eyeballs with snaps! Friday's late day ramp was the definition of frustration for the bears. I know that the opening gaps were beckoning but jeez, Louise, this is getting silly! How many more companies do we need to fess up that they're seeing ghosts? Microsoft (MSFT:NASD), 3M (MMM:NYSE) and Caterpillar (CAT:NYSE), among many others, have all expressed concerns regarding the phantom recovery.
Hoofy: Dude, you're looking at this all wrong. The rally was fueled by liquidity which, by all accounts, is still free flowing. And the market is a leading indicator. By the time it matriculates to the balance sheet, it'll already be baked into stock prices.
Snapper: Yeah, and the fact that we're stilling fresh M&A activity is further proof of a pickup, isn't it?
Sammy: That's what the bulls will say.
Boo: Or, could it be that corporate chieftains realize that their stocks are inflated and they wanna used them as currency?
Hoofy: Shocker! (pouring the bear some juice) Here...maybe if your glass wasn't always half empty, you wouldn't be such a bitter critter!
Boo: What, a couple of mergers erases the quiet riot of earnings? Yes, sequential growth beat expectations but look at the base from which it grew! The world was massively depressed when Elmer injected the lithium but, more likely than not, the prescription will end before the addiction does.
Daisy: What do you guys think happens today?
Sammy: Well, we kinda sensed that Snapper would make a stand at S&P 1020 and he followed the script. In the process, he saved the 50-day moving averages in the NDX, S&P and SOX. That momentum will likely follow through for a bit. Whether it's a couple of hours or a couple of days remains to be seen. Just be careful when monitoring today's tells. Bank of America (BAC:NYSE), which has a 12% weighting in the BKX, is down over $5 as the risk arbs do their thang.
Hoofy: From my perch, the series of higher lows and higher highs is in tact across the board. Until that changes, I'm large and in charge. (winks at Daisy)
Boo: That's the horse race right now--the rising trendlines vs. the S&P 1050-1060 area (recent top). This is when it becomes really important to identify a horizon. Quick hitters may try and catch the bounce but, for my part, I wanna use higher prices to scale further downside puts. That scale, naturally, will be dictated by the tone of the tape.
Ollie, the eight-armed proprietor, dropped the check in the center of the table. "I got this one," Hoofy said as he scooped it up, "but if you'll excuse me, I'm gonna sneak in some steak with my eggs." He grabbed Daisy and bee lined to the front door as the other critters watched in amazement. "I hope he enjoys himself," Said Boo wryly, "cause one way or another, he's gonna get screwed."
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.
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