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Young and the Restless

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The banks and semis act dry--keep an eye on these "telling" sectors.

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There's something happening here
What it is ain't exactly clear
There's a man with a gun over there
Telling me I got to beware


(Buffalo Springfield)

Bing! Does anybody else feel like this is Groundhog day? The early morning try was (once again) met with supply and my green screen is slowly morphing to red. The action is orderly (shocker Fokker!), the mood is pensive and there's all kinds of "code red" chatter on the street. Trader Toddo "likes" to hear nasty and negative rumors--they're typically loudest around trading bottoms.

Does that mean I'm fading this? No--not yet, anyway. My bullish inclinations will probably get piqued as a function of price or time. In other words, if we get some meltage down towards 810 OR we're down through Friday (and into the three-day), I may change my tune. That's not set in stone, mind you, but that's what's flashing back and forth behind my eyes right now.

On a bullish note, the VIX is up (finally) and the bulls are down (I.I) and that sentiment shift is a necessary element of the eventual rally. I would like to see these measures at extreme levels before diggin' in on the buy side but, hey...it's a step in the right direction. Meanwhile, breadth is starting to slip a bit (3:2 losers) and we need to pay attention to that--it's been the single best intra-day tell.

Keep an eye on yesterday's lows--the S&P is probing it (using the whole fist there, Doc?) while the NDX continues to outperform. My cousin, who (despite his afro) is one of the smarter fellas I know, has the S's over N's trade going on and thinks you'll see a reversion to the mean. What does that mean? His opinion (and I don't disagree) is that if you own $1 of S&P and short $1 of NDX, you'll make money on the "pair." So you know...and if you care.

For the new readers of the site, I would once again like to explain our intention here at Minyanville. We built this community as an educational platform--not an advice site--so please understand that our goal is to explain the 'how's and 'whys' and add value to your process. I'll surely toss my humble opinion out there, but in no way is that a recommendation for you to act. It would be impossible for me to advise anybody via this platform as each of you has a unique time horizon and risk profile.

Finally, and perhaps most important, will somebody PLEASE wake up that woman sitting to the left of Elmer Greenspan? She's clearly had a long night of partying because she's dozing off on national T.V. Maybe she was out with Shrubby again?

As always, I hope this finds you well.

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