The dollar is bouncing again!
Good morning and welcome back to terrapin station. Yesterday's Snapper was a legitimate trapper that saved the Minx from a swim in the crapper. When it was all said and done and the bears were real glum, the changes were small (no cookies, just crumbs). Can the ursine reboot and capture the loot? Or will Hoofy rebound with the Fed in cahoots? It's a brand new day in the Minyanville fray so settle in, team, and let's go get paid!
I was having a conversation with my pal Fleck after last night's close and he asked me what I saw 'this time.' I told him, as I told you, that a massive QQQ put seller was in the marketplace and that created demand. I also heard of some sizable "off board" SOX combos floating around. In layman's terms, that means a customer is buying a call and selling a put (same strike), thus creating a "synthetic long." "Off board" simply means that the trade is structured over-the-counter and doesn't "print" on an exchange. After a pressy break of S&P support, that newfound demand was enough to squeeze the cheese into the bell.
We further discussed how the market doesn't seem to go down well, how she labors on the south side but dances up north. I said to my west coast brother that one of two things is happening. Either the NDX is churning under its 50-day moving average--after breaking the uptrend that's been in place since the duct tape lows--or the S&P is basing nicely at its breakout point. Hoofy wants to see this type of (pressy) action (at support) as he believes that the ability to hold in the face of semiconductor smokage and the rate-sensitive roasting is constructive. Boo, for his part, knows that this mindset furthers the complacency and the longer that continues, the more ominous the eventual spill will be.
Can they get to 'em before year end? Sure, but the only thing that'll create supply (in my opinion) is lower prices. There's been precious little motivation on the sell side as the trend has been friendly. Yesterday's mental masturbation (can I say that?) jerked traders back and forth throughout the session. When the dust settled, there was no joy in Red Dye junction and the dip shtick was good and thick.
Yesterday was also the first day of "N's over S's" in a while and I wouldn't fall down in shock if that carried over until this morning. The semis closed firm and, as one of the more oversold (and shorted) sectors, it'll tell the tech tale today. On the other side of the freaky fence, the banks managed to hug their 50-day support at BKX 935 (the brokers are well below their comparable level of XBD 635) and the rate-sensitive issues remain a focus. The home builders and mortgage lenders have been smoked like a Philly blunt recently. It's been isolated and insulated, thus far, but they're the 800 pound elephant on a tightrope right now.
As we enter into the home stretch, I would like to thank ye faithful Minyans for your continued support. What once was a dream has become a reality for one simple reason--you. If you're a proud Minyan, please take the time to spread the word (or treat friends to a passport) as we turn the corner into '04. Our readership is our lifeline, we know, and we rely on the good citizens of Minyanville to further our mission.
On the philanthropic front, the charity auction to join the Minyanville family at our holiday Festivus is in full swing. Minyan Neal is currently high bid at $4000 but the race is sure to heat up into Tuesday's close. In addition to benefiting the Ruby Peck Foundation for Children's Education and the broad base of programs it supports, the winner (and a guest) will join the Professors, Mike Santoli, a handful of the sharpest sell-side coverage in the street, the critters and the rest of Minyanville family for an evening of minxy magic. It's for the kids, Minyans, it's for the kids!
Good luck today.
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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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