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The Box Trot


With the recent highs this close, do we NEED to take them out?


Walk out of any doorway
Feel your way, feel your way like the day before
Maybe you'll find direction
Around some corner where it's been waiting to meet you

(Grateful Dead)

The morning dew begins anew as the critters edge into the goo. With the recent highs thisclose (S&P 1040/NDX 1406), all eyes are searching for cracks in the ceiling that may portend further ursine peeling. It certainly feels like they wanna push Boo's tush to the wall but take a deep breath, Minyans, we've only just begun.

The SAP (SAP:NASD) upside preannouncement is pacing software which, along with the semicaps and internets, is lending support to the Nazz. The story making the rounds, by the way, is that a weaker dollar is a boon to the semicaps. Therein lies a microcosm of the current situation--a weaker dollar DOES help the multinationals (by making their products relatively less expensive to foreigners). At the same time, however, the purchasing power of our domestic currency is deteriorating and that makes goods relatively more expensive (read: inflation). The trick for us, as traders, is to identify when the psychology shifts from the former to the latter.

The early tea leaves are pointing thataway with the breadth flat, the financials mixed (banks lower, brokers higher), semicaps and cyclicals dry (off the Alcoa (AA:NYSE) earnings), and pharma marginally weaker. The dollar, meanwhile, continues to sniff lower but every currency trader in the world is now certifiably paranoid. With Elmer lurking in the shadows, how can they not be?

Finally, this little factoid was sent to me by Jason at The S&P is up 5 days in a row to start the quarter. Since 1982, the S&P has only started a quarter with such a streak three times. Interestingly, the other three also occurred in the fourth quarter (1983, 1989, and 1997). The first two extended the streak to six and the last stopped at five. At the time, each streak marked new all-time highs in the index. This makes the comparison interesting as trade above 1040 today would mark a new 52 week high and (potentially) a sixth up day. The warning sign stems from the fact the end of the up-day streak also marked the beginning of a fairly significant correction. Patterns don't always repeat, but the similarities are intriguing. Thanks Jason!

As always, I hope this finds you well.
position in spx

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

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