Why do the retailers act so heavy?
How do rumors get started?
They're started by the jealous people and
They get mad about somthin' they had
And somebody else is holdin'
(Timex Social Club)
The tug-o-war continues as the reactive traders bull/sell as a function of the latest blurb. There were buyers when the durable goods number was released (and missile destruction rumors started), sellers when the new home sales number came out (and the missile destruction rumor was refuted), and now there are buyers on the terror alert status being lowered. It's pretty bipolar and if you're trading as a function of the last blurb, you're likely whipped cream by now!
Rather than chase the tale of the tape, let's take a deep breath and look at what is. Oil continues it's upward ascent and that must be noted (on a macro level). The breadth is slowly improving on the NYSE (8:5 positive) while languishing on the Nazz (almost even). That, in addition to the bank traction, portends an S's over N's tape and that should be factored into our stylistic approach. Finally, the retailers are notable by their absence of participation. The terror alert issue does matter, at some level, but that's a function of psychology and not necessarily a tangible input. See the subtle difference?
I've got five day gips (charts) up on the S&P and NDX and there's a cute little triangle forming in the S&P. I see the"disbelief" in the market and that's bullish on the margin--but while the tape may lift in the near-term, I'm still in the camp that higher prices are fadable. Today's business? Not sure--but that's my honest read (as always). One thing to remember as we find our way--the masses are confused and reactive. As such, they'll likely turn buyers higher and seller lower.
I'm picking gingerly at some S&P puts, fyi...just trading. I'll be back.
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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