Fire in the Hole!
I'm getting dizzy!
Tooth for tooth eye for an eye
Sell your soul just to buy, buy, buy
Beggin' a dollar stealin' a dime
Come on can't you see that I am stranded
Caught in the crossfire
(Stevie Ray Vaughn)
You want answers? I want the truth! Well, Col. Jessup, the truth is that active traders everywhere are all staring at the same levels and gripping the handlebars en masse. Under S&P 1060? Batten down the hatches! Above S&P 1060? Group hug! Overly simplistic? Maybe, but the price action supports that assertion. Let's take a quick sniff before I sharpen my chopsticks and get down to business.
The dichotomy between the two main sectors--S&P and tech--is obvious. From a (uber short-term) trading perspective, I've been following that guide. When I grab merchandise on the long side (today), it'll likely have four letters. If I sense another leg lower, I'll check a borrow on big board names. I'm not playing huge but if we break either way, those sectors will likely lead the parade. I've been in and out more than Hugh Hefner but, with tight stops, it's all good.
The dollar hangs tough (as does gold) and interest rate futures are pricing in a 62% probability that Elmer will raise rates 50 bips by June (up from 48% Monday). That continues to weigh on the rate sensitive issues although certain brokers are perky. Tech internals continue to lag and that, as much as anything, is holding a leash on the chips. It's tug-o-war city, my friends, and one of our critters is bound to be bitter.
My humble sense is that downside risk outweighs upside reward but that doesn't mean they can't rally (or trade long). As it stands, we've put in a handful of lower highs since December 3rd and that, coupled with overhead resistance, is the bears' call to arms. All the while, Hoofy will (correctly) maintain that the bears are pressing the breakout level and, after a textbook trap, it'll be deja Boo all over again. Man, mom was right--I shoulda been a vet!
I've got a mound of protein calling my name. As always, I hope this finds you with some jingle in your jeans.
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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