Fokker in Love
By Todd Harrison Feb 26, 2004 9:05 am
Europe is dancing on either side of the flat line.
Good morning and welcome back to the dancing queen. With yesterday's bounce and the small Snapper pounce, the once brazen bovine sidestepped a trounce. It was, afterall, becoming quite clear that Hoofy was due to swap fear for cheer. The question, I guess, is whether he'll press and caress the express with some upside finesse. Or perhaps that small lift was the only bull gift and the trend has now changed with a momentum shift? It's a spankin' new day and it fits like a glove so fear not, my friends, 'cause Fokker's in love!
As this morning is getting long in the tooth, I'll circle back to Mr. Fokker's exploits later in the session. Suffice to say that the bear found a bunny and his claws were razor sharp! Speaking of bears (cough), I can't help but smile as I watch my friend Rick Schottenfeld talk about the risks of the GSE's and their massive implications for the economy. Rick and I were on Squawk Box last summer and he was (correctly) bullish as I focused on the troublesome maze of debt and derivatives--and a ticking Fannie Mae (FNM:NYSE). Hey, I'm always early--and it still may be--but I can't help but think that Elmer is starting to look for a scapegoat. Mr. Raines, step into my office!
Alright, the here and now...yesterday's light volume bounce, while a welcome respite for Hoofy, did little to alleviate his technical headaches. While Kevin and I debate whether the NDX is an inverted cup and handle or a head and shoulders (he prolly has the edge as a pure technician), the net result is the same--it ain't good. Yes, the NDX stochastics are close to crossing (buy signal) and, as it stands, this is a corrective phase (until NDX 1450 fails) but negative divergences (bullish percentage sell signal), double tops and non-confirmations are still lurking.
At the risk of being redundant, at the risk of being redundant, the financials (and breadth) will dictate whether groundhogs will retun. Over and over and over, the tape pulled back and the bears got a kiss....only to get hugged and squeezed and utterly displeased. It is interesting to note that the put/call ratios and VXO (vol index) are still yawning--zero fear--and that's a shift from previous pullbacks. And again, the NDX "lower highs and lower lows" is embryonic but weakness from here will cement that pattern.
On a cautionary note (to the bears), David Nichols makes a good point this morning when comparing this juncture to the November battle with S&P 1060. He notes that the internal mechanism is different (and less bullish) now but the charts are a mirror's image. Just something to note--and temper--as we edge into a new day of wiggles and jiggles.
Finally, for those who signed off early last night, please make sure you catch Bill Fleckenstein's Rap. I've known Fleck a long time (and talk with him every day) and he's a very sharp cookie. If you like his Rap--which appears every Wednesday on the 'Ville--you can sign up to read it daily at his new website. Also, in a shameless plug, I must encourage you all to download the Buzz & Banter alert feature--it's all day bullet point type pings from the critters in a small desktop window and it's awesome! It's all in the vein of education, mind you, but the best education is a real time application.
Good luck today.
position in fnm, qqq
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