Toasted Pop Tart
Europe is tacking on marginal gains.
Good morning and welcome back to the warming. Yesterday's heat ignited the street and flipped our young bear on his head from his feet. While a rally was due in the Minyanville zoo, the upside surprise squeezed the cheese out of Boo. "It's really unjust," he said in disgust, "but I promise you, pal, the boom will go bust." Does the bear have a clue that we should pursue or has Elmer driven young Boo to sniff glue? It's a brand new session of minxy obsession so let's saddle up and answer that question!
After two full weeks of crimson leaks, the bovine fought back with their upside technique. It seemed a bit telegraphed, I suppose, but sometimes it pays to not to over-think the wink. The much discussed oversold condition bungeed higher and, on a thin and thinner day, it was enough to spur the herd. Almost on cue, the teletubbies dribbled anew and openly opined that we've only just begun. Can it be? Was that really the correction?
That, in a nutshell, was the topic of conversation this morning at Ollie's diner. In the middle of his hearty breakfast, Hoofy reached into his leather briefcase and pulled out an October 8th column entitled Razor Burn. "We've gotten the Razor these last few weeks," he offered as he waved the Gazette, "the only thing left is the furry burn!" He shot the critters an all-knowing look and settled back into the booth. "It's time to break out the Viagra, boys, 'cause the performance anxiety is as stiff as I've seen it!"
The brazen bull has a point in that portfolio managers are schvitzing en masse. Further, if this really IS the mirror image of last year (we spiked into Thanksgiving weekend before falling apart), the angst is likely to grow and sow the fear of missing. This is the first year in four that the bulls are to score and nobody wants to underperform. The possibility that we've already corrected has the fence sitters on the edge of their seat with their fingers on the trigger. "It's not gonna take much to tip the balance," Snapper is quick to add, "and if we're not gonna trader lower, the buyers will wake up as we lift higher."
I respect the elements of yesterday's rally--the breadth was good, the financials participated, tech flexed and those that were trading equities "dollar specific" lost their catalyst (for the day). Granted, the volume left a lot to be desired but during a holiday week, it's hard to find fault in that. Still, I continue to have my doubts that we've seen the meat of the Razor as the beacon of S&P 1060 continues to call. Those sexy sirens are surely causing bulls to linger.
Thus, the stage is set for the pop top circus and year-end fireworks. The S&P (held the 50-day) is eyeballing a fresh flex and, as each test of resistance (support) removes a layer of supply (demand), we must respect that. The banks, after yesterday's bounce, are back near resistance (BKX 942) and potentially putting in a right shoulder, the techs (which are still in the midst of a third "lower high") will look to put that trendline behind it and the dollar is in a gray area between an oversold bounce and trend resumption.
While turkeys and bulls are notorious for their friendship, I wanna point out that the technical lunar eclipse we discussed at the beginning of the month is still "out there." Thus, these levels assume added importance for the waveists and other well-respected technicians. The oversold condition has now been alleviated and while the bulls seemingly have the momentum, the next step is gonna be a doozy. Stay tight, understand that it's thin and whippy and think positive, Minyans--it all starts within.
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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