Nobody thinks this is gonna stick. Stick this!
Jane says, I'm done with the sergio
He treats me like a ragdoll
She hides the television
Says 'i don't owe him nothing',
Well, they say it's better to be lucky than smart and Hoofy's schnitzel is a prime example of that. The forest felt dry...but the leaves needed a spark to ignite the upside. In a normalized market, the Iraqi news would likely be a non-event. In a wickedly oversold environment, it assumed added significance and tossed the bears like a ragdoll.
Will this last? I have little doubt that, eventually, we'll break the October lows (third times a charm). However, I'm trying to wrap my arms around the short base and the path of maximum pain. Are the shorties trapped and hoping? Is the upside sustainable in the absence of "real" buyers? Is Fokker secretly hoping that I go home and get into bed?
The answers to those questions are: most likely, I don't think so (it's just a function of 'when') and not on your life, kid! While my stochastics are still coiled and I 'think' a stiff rally is out there...I just don't know if this is the start (gut says no). First resistance is S&P 840/BKX 725 and SOX 280. I would venture a guess that any/all of these will be tested (on the upside) before a potential fail.
Caveats nestled in today's muck include the internals (not confirming yet), the retailers (act heavy), Citigroup (size matters) and flow (all short covering thus far). We know that the buyers are always higher but the one constant throughout this period has been the inability of the upside to exhibit any traction. As such, the burden of proof is on the bulls and, while I'm hopping with Hoofy, I've got my right...Hoof...up.
Keep in mind that Elmer speaks (on the hill) tomorrow and he's one of the few souls who can still move markets. In addition, a handful of companies will release earnings (AET, CVC, CLX, DE, AMAT, NTAP, ect), BankAmerica kicks off their tech fete, the mighty bear has a software show, Cowen's aerospace conference lifts off and there's a handful of company sponsored meetings. In other words--there's a LOT going on this week!
I'm going to turn my attention back to the tape and sip gently on my tea. I think I shocked Fokker and Pepe this morning with my snippiness and I wanted to a moment to apologize. There's no excuse for raising your voice at those trying to help you and while I'll make mistakes at times, I'm man enough to admit when I'm wrong. Mea Culpa boyz--now get back to work!
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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