The Run and Gun
Into the distance, a ribbon of black
Stretched to the point of no turning back
A flight of fancy on a windswept field
Standing alone my senses reeled
The spirited sprint continues as the bulls smell blood and Boo's gotta be a tad nervous. With every technical trader on the street focusing on S&P 820, it was almost too obvious of a place to halt. Now, as the Minx pokes her nose through to the upside, the short squeeze/performance anxiety dynamic has officially kicked in.
There's a lot of talk regarding the "perfect storm" brewing in the trading circles. The dollar is strong, treasuries, gold and oil are weak and equities, in case you haven't noticed, are getting jiggy. While I continue to see the "war trade" being unwound, I'm also sniffing around for signs of legitimate demand. This morning, there was a decent mix between real money and short covering. Into this last leg higher, however, I'm seeing much more squeezage than institutional buying. Obviously, that doesn't mean we can't continue higher, I'm just making an observation.
S&P 830-835 and NDX 1020 are the next areas of upside contention and that's the levels I've told Boo to focus on. I've got one leg in the bear costume and more likely than not, I'll slip another appendage in if/when we get to that point. From there, I'll use an upside stop to ensure that my trip, if that's what it is, doesn't turn into a fall. The trendline in the S&P comes into play around 835ish and if they push through there, prudence dictates stepping aside and resetting the bearings.
Tony and I have been chatting all day about his intermediate ducks and there's no compelling signals coming from those indicators. In the interest of objectivity, a surge in volume during a lift IS bullish and it's something to factor into our trading mix. Still, I covered up yesterday because it felt a bit pressy and twenty four hours later, sentiment has shifted significantly.
Beeks will swing by tomorrow with the Producer Price Index (exp. .6%, .1%), Business Inventories (exp. .2%), Industrial Production (exp. 0), Capacity Utilization (exp. 75.6%) and the University of Michigan Confidence (exp. 78). The bulls are now looking for ANY reason to follow through and all eyes will be on tomorrow's economic releases.
I've gotta hop and chop, my friends--I sincerely hope that this finds you all with a little jingle in your jeans.
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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