As the game clock ticks closer to yearend, traders seem intent on taking a last-second shot to win the game. It's no shocker-through the years, the market has conditioned players to expect high scoring returns and shooters, by definition, like to step up and steal the spotlight. Recently, however, the fundamentals of the game have changed and the disciplined players have learned to take better, high-percentage shots. It's ball control offense, Minxy style- Pete Carril would be proud!
We've belabored the point that a good game plan requires time management and rigorous practice and our team is being put to a daily test. In the reactive world of technical analysis, it's good until it's bad--and then it's very bad. Take, for instance, our current juncture. We've been watching NDX 1070 as a level of contention as it's failed there six times since June. If the techs can poke their nose through, it would be consider bullish by the technicians in our midst. If we fail, however, chartists will point to the "double top" that's forming in November as an ominous sign for the market. Talk about a two-way player!
A similar situation is shaping up in the old school arena as the S&P trades in the zone defense. As it stands, a "head and shoulders" formation is still a distinct possibility as the index waffles sideways. If, however, the Spoos can take out the previous November high of 925, there will be no more tears in the locker room, please. In minor league action, watch SOX 337 (November high) and XBD (brokers) 430ish (November high and 200-day moving average) as additional levels and, while you're at it, keep half an eye on the BTK (biotechs) for additional signs of dandruff.
The season is winding down and the crowd is frenzied, so clear the mechanism and play your game. When the final horn sounds and we clean out our lockers, we'll have plenty of time to reflect on our efforts. In the meantime, keep yourself in shape mentally and physically as the big boys bang around in the paint. As they exhaust each other, look for the ball to be kicked out to the perimeter-and then take the open shot.
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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