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Trust Issues


Penny wise and pound foolish?


Some love is just a lie of the heart
The cold remains of what began with a passionate start
And they may not want it to end
But it will it's just a question of when

(Billy Joel)

The morning zing begins to sing as traders try to control this thing. The brief flirtation with the green screen quickly faded as traders, singing Moon River, probed the downside. While it's quiet out there (bonds are closed), the gorillas are stirring in the midst (on the sell side). Is the writing on the wall? Or is the wall of worry firmly in tact? Get off the babysitter, Joel, and let's take a look.

A quick check of the morning breadth shows two losers for every winner. Further, the NDX breached technical support, the SOX continues to eye the gap (from November 3), the biotechs are fugly (Putnam?) and the S's are flirting with the all-important 1044 level. Still, and despite these noticeable issues, the tape feels like it wants to try the upside. The semicaps trade dry, the BKX is green and it was a "little" pressy on the dip.

How you approach this juncture is a function of your personal style. For my part, I made some covers into the dip (discipline) and will look to s)" target=_blank>scale it back out into a lift. I still wanna trade around the short side, mind you, but I also wanna be in a position to use prices to my advantage. As a function of my gamma, I get shorter as the market falls and "less short" (and eventually long) when/if it rallies. I have confidence that lower prices are in the cards but an upside shakeout is a distinct possibility. Too granular? Depends on your stylistic approach, cookie.

Two notes of caution. First, Microsoft (MSFT:NASD) has broken its 200-day moving average and General Electric (GE:NYSE) is sitting on its 200-day moving average. If the two biggest stocks in the trading universe "break," it's a safe bet that the market will face a headwind. Put those on your radar as we mush through the muck. And think positive, Minyans--it's gotta start within.

I'll be back.
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