The action in Europe leads me to believe that the opening is a fade!
Holy Tabitha, a quadruple witch? I suppose the Minx wasn't satisfied with the time honored hat trick and decided to add some spice to our life! I can't tell you that I'm an expert on single stock futures but I can tell you they'll be expiring today (along with single stock option, index options and futures). I don't sense they'll have a major impact on the price action but that's ok-we have enough on our plates! The index paper comes off in the morning while single stock options have an afternoon expiry. To top it off, we have that saucy NDX rebalancing on the close and I continue to hear there's size for sale...although the very fact that everyone believes this concerns me on the short side.
The bulls are pointing to yesterday's TRIN (above 2) and the 5-day RSI on the VIX (above 70) and, for those that don't understand what these are, no worries-they're short-term technical positive (thanks Jodi). Toss into the mix those saucy stochastics (close to buy signals, not there yet) and the fact that the S&P and NDX are (thus far) clinging to support and, well, you have all the makings of a counter trend rally. Am I going to play it that way? Nope.
I hopped into my office (for the last time) today with one paltry leg in my metaphorical bear costume (25% conviction on the short side) and one foot in a Birkenstock. I opined yesterday that in a textbook Razor Burn scenario, the bears will flip to the buy side and attempt to game a year-end rally-only to bottleneck with the rest of the bulls on the exit ramp. Will this happen? It might, rabbit, it might...but rather than bet blindly on a random thesis, we should walk our journey one (disciplined) step at a time.
I will maintain my short bias and move my stop loss back up to S&P 900. We faded (read: sold) that level yesterday and it worked (humble) so we might be tempting fate. Still, with the dandruff blizzard blowing through Minyanville, I'm going to lean to the left and see which way the four winds blow. Remember, today's my last trading day of the year and I'm going to leave the hallowed halls naked and sans costume-win, lose or draw.
S&P 875 remains the bottom of the cluster muck (and the support) while S&P 900-910 is resistance. In four-letter land, NDX 1000 (then 975) is support while 1050 remains resistance. The SOX neckline resides at SOX 280ish (resistance is 310ish) and the line in the sand for the banks resides at BKX 750. Watch these levels as chief tells today along with Cisco and Microsoft (gorillas), the retailers (been for sale), our macro influences (dollar, crude, gold), the European bourses (DAX 3000) and our trusty internals.
Finally, as it's my last column of '02, I wanted to make it fun for the readership so let's start the day with a little trivia question. Each critter has their own tee-shirt at Harrison's Department Store and they're selling rather briskly. Name the best selling critters (one through five) in order of popularity and the first correct answer will win their choice of Minyanville tees. Send your response to firstname.lastname@example.org and remember, only one guess per reader. Wasabi!
See you after the opening.
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 email@example.com.
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