I wonder if traders are going to err to the side of caution in front of the long weekend?
It's a blanket of white in Minyanville and the critters are trudging through the snow as they prepare for freaky Friday. Evidently, not everyone made it into work today-- there's barely a smidge of research out from the sell-side! Hey, maybe they're just fried...or maybe, just maybe, they were waiting for the economic numbers like everyone else!
As I'm sure you know by now, the unemployment rate came in at 5.7% (exp. 6.0%), payrolls were better (but prior period revised down) and average weekly work hours were 34.2 (I should be so lucky). Net/net, when juxtaposed against the near-term psychology, it's a constructive number. Now we've got to see if it can overpower the big picture drek.
This can certainly spur a minxy spring but I've got to tell you, the fact that the "pundits" on t.v are so quick to yell "all clear" is upsetting to me. Not because I'M going to listen to them...but because some people DO. They've done it at Nasdaq 5000, Nasdaq 4000, Nasdaq 3000, Nasdaq 2000 and they continue to do it now. This is not an indictment of their opinion (we all have our own), but don't state it as fact--it's costing people money!
Anyway, turning our attention back to the Minx, equity funds reported net cash outflows of $4.3 billion (with a B) with over half coming from growth/value and technology, according to AMG Data. This mass exodus is likely a combination of war fears (guns and food!) and statement schvitz. The public received their final statements for 2002 and, from the looks of it, many said "uncle." Is that the ultimate contrarian signal? Some will argue it is--but if there's a scarcity of available money (cash reserves at funds are still quite low), this drag can continue for a while.
We've walked through our metric bases a lot lately. The fundies are in a fog, the technicals are mixed (cracked levels vs. oversold and coiling) and psychology is bipolar (and ultimately complacent). How you approach this juncture? Carefully and with discipline while appreciating the wicked crosscurrents in play.
First support in the S&P comes into play at yesterday's lows (833) and that's the only discernable support before the October lows. On the upside, trendline resistance resides at 860 and mamuluke resistance at 870. In the NDX, 960 (held three times this week) and 950 (former resistance from Sept/Oct) is support while NDX 985 -995 has a couple of trendline resistance lines. For the financials, BKX 725 was the triple bottom break and should act as an (initial) ceiling. Finally, for the semis, SOX 280 remains daddy's nemesis on the long side.
I opined yesterday in a random thought that my inclination was to trade from the long side and, while I continue to sense a rally 'out there', I'm not sure when (and from where) it begins. I wish I had more clarity for you and as thoughts crystallize in my mind, I'll surely share them. When I don't have a clear sense, however, I'm not going to create a bias (or open my closet) for the sake of a column. I still "see" the Shim Sham--I just haven't resolved (in my mind's eye) whether there needs to be another messy spill before the Sham.
I'm sure that, as the day progresses, we'll get further clarity. I'll be keying off the internals (never confirmed yesterday), the financials (most important group), the semis (sentiment), Microsoft, GE and Cisco (leadership), the dollar and, of course, our levels.
Before I go, I've gotta thank you for the self-imposed guilt trip I laid on myself last night. Slaino and I were walking home from work and, by some freak accident, we wound up at the Four Season's bar with Grey Goose apples martinis in hand. After a brief flirtation with the libation, I began to think about how I was possibly going to explain to the readers (again) why I blew off the gym. So, despite my undisciplined interlude, I snuck out of the crowd and hit the weights--with granny breath!
See you after the opening--hit 'em hard!
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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