Love for Sale
Where unsure, trade "in between"
Your love is like a tidal wave,
Spinning over my head
Drownin' me in your promises
Better left unsaid
The Hump Day fray is underway as traders look for something to say. The economic data was mixed--factory orders a bit light and ISM non-manufacturing somewhat better--and we'll now settle in for the session. With Cisco (CSCO:NASD) and Qualcomm (QCOM:NASD) earnings tonight, you can expect a fair amount of posturing in four-letter land. Also note that every technician on the planet is focusing on S&P 1050 (and 1054) as inflection points.
I'm carefully balancing the potential paths as we edge through this session. On the one paw, Scotto's analysis (along with my belief that bear market rallies end on good news) points to an exhaustion high after Friday's jobs data. That may (or may not) prove true but, regardless, there are plenty of decisions to make before that (among them, whether to game that incremental move). The trick, in my eyes, is to adequately allow for the thesis to unfold while maintaining exposure that is true to your view. The litmus test? Ask yourself how you'll feel if the market was either up or down 25 handle. If your angst is too severe either way, you're likely too big.
A quick check of the morning breadth has two losers for every winner. The semis are outpacing the financials (N's over S's) as the piggies never found their footing today. Along those lines, it's worth noting that our friends at Dorsey Wright highlighted the bank sector today and noted a "relative strength" sell signal was triggered. It's a "big picture" development (not a day to day tool) but it's worth a mention nonetheless.
I'm gonna pick (read: nibble) as a function of discipline and out of respect of the looming unknowns. The growing belief (by the few lone bears) that Friday will produce a "spike high" is rumbling through my crowded keppe. Does that mean we won't get there (and the ursine don't have a chance to short) or is that proof positive that we'll blast-off and never look back? Something to think about as we ready ourselves for the coming street fight. Don't mess with the Wongs!
As always, I hope this finds you well.
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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