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Autumn Wind


Its casual Friday in Minyanville and the colorful leaves have begun to fall in our humble little town. The critters, who've been working their crackers off, are psyched for the weekend and the opportunity to relax and recharge. Before they kick it, however, they know that 20% of the week and many important decisions remain. As such, they've double downed on the Dunkin Doughnuts and snuck in an extra cup of java as they prepare for today's expiration.

The first batch numbers are out with the Producer Price index coming in at 1.1% (.5% ex-food/energy) vs. expectations of .2% (.1%). Business Inventories were also higher and registered a reading of .5% vs. expectations of .2%. We'll get a few more economic schnitzels at 9:15 and then the WOLVERINES! number hits at 9:50. After that, all eyes will focus back towards our technical levels and the looming expiration.

I've always found that expiration does two things: exacerbates the volatility on the days preceding the actual expiry and, potentially, create magnets (pins) at certain strikes. With regards to the latter, I always look at the open interest (outstanding contracts) relative to the average daily volume (of the underlying) when looking through the haystack.

Walking through our technical playbook again, S&P 870-875 continues to be a good support zone. If they can power through 900 with any vigor, cast your eyes to S&P 925 (November highs) as the next level of contention. For the techs, NDX 1000 will act as support and NDX 1070 (November highs) will be the near term resistance.

The Banks and brokers (number cuts) will remain the traffic cop for the big board while the SOX will show us the way for the techs. Peripheral tells include our Generals (GE downgraded by JP Morgan), software (some Merrill downgrades), storage (been dry) and the retailers (consumer proxy). As always, we'll also be keeping our ear to the ground for gorillas and alligators (institutions and allocators), while keeping half an eye on Crude, the US Dollar and the internals.

It's another important day for the tape (aren't they all?) so splash some water on your face, crank up some Jimi and let's rock and roll to end this week. The only person that can stop you.

See you after the opening, Fokker!

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