By Todd Harrison Feb 18, 2004 8:46 am
My winter hibernation will soon be over!
There is a road, no simple highway
Between the dawn and the dark of night
And if you go no one may follow
That path is for your steps alone
Good morning and welcome to the green mile. Yesterday's prose smelled like a rose and recaptured the drip from last Thursday's close. While it sure felt like more for those who stand sore, we're now at the levels we've probed twice before. "If I could get one more push that's hardcore," said Hoofy the bull in almost a roar, "this ceiling ahead would then be a floor!" Can Boo and his crew toe this huge line and trap all the swine for a tricky decline? Or will the sun shine on this tape most divine and continue to pay the chubby bovine? It's hump day anew and you know the drill, so let's settle in for some vibes in the 'Ville.
Tuesday's upside swerve and volley, while returning the advantage to the bulls, simply served to negate Friday's weight. If you folded the two day returns in half, you'd find that the S&P, NDX and breadth--three barometers in the short term game--were virtually nil. Sure you had some net positives (brokers) and negatives (semis) but, for the most part, they cancelled each other out. Now we're back at the levels deemed mission critical by the technical types and both camps have their fingers on the trigger.
To be sure, Hoofy's gotta be feeling pretty good about himself. Despite the recent round trip, the sell side of the market has lacked a certain motivation for some time. The dips have felt almost obligatory, begrudging if you will, and that's intensified the prevailing psychology. Anybody who remembers the bubble--and you would think more would--can tell you that momentum tends to rationalize reason. Back then we shifted from P/E's to page views to eyeballs. Now, in the case of labor, we're migrating from "it's a lagging indicator" to the new productivity paradigm. The one constant remains investors who continue to focus on risk when the market's lower and reward after it's nice and high.
Still, the bear case will remain hollow for as long as the tape is lofty and if Elmer has his way, that'll be until he's on the Boca links. The Fed may be able to create liquidity but they can't create jobs, and the 3D ramifications (dollar, deficit, debt) loom ever larger in the background. When will the V-turn hit? When these very real issues balance (and eventually overwhelm) the benefits of stimuli and the groping for immediate gratification. There is an inflection point in both time and price and while even the most fervent fur has resolved to the fact the pending pullback will be a simple correction, chances are it'll be anything but.
Right here, right now? The bulls will try and ride the leadership of the financials and build upon yesterday's minty breadth. They want (need) to push the S&P through 1160 (on better volume) and trigger the buy stops that are surely set (1165). To do this, they'll likely require participation (if not leadership) from the tech sector which, along with the transports, are textbook non-confirmations (of a new high). There are also a smattering of momentum divergences in place but they'll likely follow the next leg of momentum. And lest we forget, as of this post, we're still at formidable resistance.
Can we break out? Sure--corporate spreads are firm enough to support such a move, the banks (brokers) will lead by example and the month long sideways consolidation has stored sufficient energy. You always wanna see both sides of the trading coin and, rest assured, most of the market is already betting this way. If the Minx is to travel the path of maximum frustration, however, we must respect the bubbly psychology and increased risk of trap doors. For if we've learned anything over the years, it's that the tape has a mind of her own.
In Minyanville news, we're in lock down mode for Monday's massive re-launch and our roster of professors are readying for the new functionality. The Buzz & Banter feature will be of particular interest for active Minyans as it'll offer dynamic real-time commentary throughout the trading session. No fluff, no fooling and no nonsense--it's all trading, all the time.
Good luck today.
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