The Gobble Wobble
Here comes Beeks!
Good morning and welcome back to the turkey shack. The skeletal crews are singin' the blues as we again power up for the daily news. With traders away from the minxy buffet, the remaining critters will try to get paid. Will Snapper poke through and bid Boo adieu or has our young bear yet to make his debut? It's a pre-gobble session of minxy obsession so let's carves ourselves out a winning impression!
That constant knocking you heard yesterday afternoon was the bulls trying to open the door of opportunity. We all know what level they're looking at (S&P 1060 if you've been on a submarine) and, with conditions thin and thinner, they tried to light a spark in the dark. Alas, they were ultimately thwarted and that late afternoon pullback was day trading inventory coming off the sheets. The bulls may have lost that battle but rest assured that the war has only just begun.
There's been alotta buzz of late as to whether the much discussed correction is already in the rear-view mirror. From my perch, one of two scenarios is presently unfolding. The first is that the Minx really is 'that' strong and the corrective process left nary a dent. The other is that, with everyone looking for the fabled correction, this last upside fling is a head fake that's sucking in those doubters. Ironically, if the latter is true, there is a distinct possibility that the real correction has yet to begin.
While perception is reality (particularly in thin tapes), the shallow pullback did little to change the troublesome backdrop. All of the conditional elements that have been in place remain in place, with the notable exception that we're no longer uber-extended. Granted, they've been in place for a while and it hasn't made a lick of difference--but that doesn't mean they've just gone away. I offer this input not to sour the mood but to provide perspective. If you want blind optimism, you can always watch the teletubbies.
The next session and a half will be extra-whippy as folks tend to the important stuff. Still, the Minx is open for business and, as such, we've gotta stay on our toes. The obvious focus is the upside line in the sand and, if breached, the stage will be set for a pop and drop. Watch the breadth (was fabu yesterday), the financials (still the most important group), Intel (INTC:NASD) (was heavy yesterday), and the macro tells. As we eyeball Beeks, Europe is green with envy, the dollar is a tad lower, gold is hanging and Fokker already has his napkin tucked in his shirt.
As discussed yesterday, I'm allowing for some upside ping as, for now, the path of least resistance seems higher. With that said, a distinct possibility remains that we remain in a topping 'process' (scenario two above). That may not be today's (or Friday's) business, mind you, but that collective sigh of relief may exhaust this run (particularly if acne unfolds). Define your horizon, understand the backdrop and let's turn the turkey corner on a positive note.
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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