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Animals on the Run!

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If they were bearish at S&P 790 yesterday, why wouldn't they be bearish at S&P 820 today?

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"Over? Did you say "over"? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no! And it ain't over now. 'Cause when the going gets tough...the tough get goin'! Who's with me? Let's go!"

--John "Bluto" Blutarsky, Animal House



It's a another beautiful morning in Minyanville and the critters (dressed in togas) have been scurrying about preparing for the new session. After yesterday's thataway, they're staying on their toes and expecting the unexpected. There's a ton of crosscurrents in play so let's tap this keg and get our party started right!

In overnight news, TYC, BAX and IP wet the bed, Goldman Sachs cut numbers in the software sector, Monty trimmed numbers in CSCO, Lehman upgraded DE, PH and KMT, JP Morgan upped DOX, CMVT and VRST and Prudential upped RD and SC.

The dollar, meanwhile, is surging and treasuries are under pressure on hopes of a quick war. While I'm unsure of the prospects of a "quick war," I will offer that hope continues to spring eternal. The U.N Security Counsel vote, when it happens, will likely provide the next tangible input on that front and it looks like it's gonna be a close race. Stay tuned!

Retail sales came out this morning and they were much weaker than expected. However, the Minx has bigger issues on her plate and, thus far, she's shrugged off the shopping woes. Yesterday's upside reversal planted the seeds of green in the mindset of the masses and a higher opening (on the back of a snappy Europe and absent exogenous shocks) was intuitive. Now the real games begin!

In an effort to view the big picture as a series of little pictures (and ensure that our trips don't turn into falls), I'll be closely monitoring our technical levels. S&P 800ish is obvious support (as we saw yesterday) while S&P 820, 830 and 840 will all act as resistance. In techland, NDX 950 will provide support while NDX 990, 1000 and 1020 will be upside levels of contention.

Our trusty stochastics edging towards buy signals (much closer in S&P land) and that's something we should monitor as we continue to find our way. It's worth noting, however, that Tony's intermediate ducks have yet to quack in unison. My contacts are telling me that all the early tickets on their desk are black (buys) and, for some reason, that's got my antennas up (as a contrary indicator). Still, I respect (not defer to) the price action and while I believe this is a counter-trend rally, I'm (thus far) uncertain of where it'll end.

Tells today will include the financials (BKX 700 is next resistance), the semis (dry all day yesterday), the cyclicals (IP blow vs. Lehman upgrades), software (in the face of number cuts), the dollar (screaming), gold (342 was technical support), crude, our levels and the internals (never confirmed yesterday).

I'm wondering if the first fade (sale) of S&P 820 is the "easy" move and I may try it small. Despite big picture bearish predication, however, I'm not married to any one side of the tape right now (I'm trading naked). I'm conscious of the reactive nature of today's money managers and the palpable emotional charge. As such, I'm playing a little smaller and looking for that elusive edge.

Europe up, dollar strong, bonds down, gold waxed---these are the ingredients of a strong rally. I will remind you, however, that yesterday at this time, virtually all of these variables were pointing the other way and we ended in the green. Is today mirror image day? It's entirely too early to tell. Just take it one step--and one trade--at a time, cookie, and keep that right hand up.

Good luck.

position in spy

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.

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