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The Trin Grin

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If everybody's focused on the TRIN, will the upside be self-fulfilling or is it the ultimate bull trap?

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A boy tries hard to be a man,
His mother takes him by his hand,
If he stops to think he starts to cry.
Oh why?


(U2)

It's a beautiful day in Minyanville and the critters are readying for another ride on the almighty Minx. With yesterday's drubbing fresh in their minds, they're making sure that each step of their preparatory process is carefully completely as to avoid any unnecessary errors. They know, as do I, that the intensity level will redline once the opening bell tolls and good practice yields good game day results.

We power up our systems this morning to find firmer futures and flattish European bourses. Why? One reason, potentially, is the proposal offered by six Security Counsel members to set an April 17 deadline for Iraq to comply with U.N demands. While it's far from ratified, the specter of unification and/or potential avoidance is once again buoying hope.

The other element of the early action is the absurdly high TRIN reading yesterday (bullish). The TRIN, developed by the savvy technician Dick Arms, is the ratio of the number of advancing issues to the number of declining issues divided by the ratio of the volume of the advancing issues to the volume of the declining issues. Confused? I'm sure--that took a lot of energy to write! Still, when this measure registers extreme readings, it's a fairly reliable guide--and it was off the charts yesteday. That said, and with all due respect, I will offer that every single trader I spoke to this morning was focusing on this--every single one. That scares the sprinkles out of me!

In overnight news, Nokia and Volkswagen both offered disappointing results in Europe, SHW, TSG and X all preannounced, CS First Boston booted STM, Opco upped IPG, the mighty Bear was cautious on MEL and STT (regional banks), the dollar continued to slip (watch this please) and Fokker began stalking the young lady he met at our bowling tourney.

Yesterday in chartland, the S&P resolved our pennant formation to the downside (see below) and the all-important bank index (BKX) closed at it's lowest level since October. While I expect the bulls to grasp for the hair on their trinny trin trin, we must note these two developments and factor them into our mix. It MAY not matter for purposes of today's market action but it certainly shifts the broader landscape in favor of the bears. The S&P will find initial support at 806 (February's intraday low) and resistance at 820 (past support).

Tells today include the banks (BKX 700 now becomes resistance), FNM (psychology), the semis (holding SOX 280), the retailers, the horsies (MSFT, CSCO, DELL), Europe, the macro tells and our internals.

I hopped into work with one leg in my metaphorical bear costume. While I continue to sense further slippage (before a stiff lift), today's action hasn't fully crystallized in my mind's eye. As such, I may choose to move to the sidelines at a point today. Flighty? I don't think so--I'm operating with super-tight parameters and I'll never have metaphorical imagery that's not consistent with my level of conviction.

In Minyanville news, I felt the need to thanks Mr. World Champion Buc's fan and Mr. World Class Joisy again for their generous and humbling tributes to charity. We're thisclose to announcing a new raffle that will absolutely knock your socks off! We know that many Minyans aren't in a position to pony up big dough--even if it's for the kids--so we're gonna make this new event inclusive such that everyone can participate. Stay tuned, my friends, details will be announced this week!

Hit 'em hard!


No positions in stocks mentioned.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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