Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

The Tuesday Shuffle

By

Alotta folks think that today's gonna be my day in the sun.

PrintPRINT


Many have I loved
Many times been bitten
Many times I've gazed
Along the open road

(Led Zeppelin)



Good morning and welcome back to the scorning. Yesterday's drubbin' was a full-fledged bull snubbin' as Hoofs got beat down by a crimson bear clubbin'. At the end of the day in the minxy soiree, the once fertile fields were in pure disarray. Upon further reflection of this widespread infection, Boo has now found their stealth resurrection. Can this collection of ursine affection put down this Minx and stem the rejection? Or is it the bears who now need protection as Hoofy digs deep in the other direction? It's a swanky new session of critter obsession so strap yourselves in and let's leave an impression!

Despite the widespread slippage, a certain bravado can still be heard emanating from Matador City. Monday's Minx was certainly fugly and, on the heels of last week's bleak freak, you'd think that the bulls would be schvitzin' a bit more. There was certainly some agita floating around (as evidenced by the pop in the VXO) but, by and large, the decline has been relatively orderly. Now, as we enter a session that will likely be Hoofy's call to arms, we've gotta put our keppes together and figure out what it all means.

While most folks entered this past weekend relatively "sure" that a greater fool would assume their risk, the bulls have a much better chance at puttin' at today's Ritz. Why? For one, both the NDX and the Trannies are clinging to a double bottom (with the latter tickling the 200-day). For deux, 3M (MMM:NYSE) positively pre-announced yesterday and with the industrials a kitten's whisker from DOW 10K, that should embolden a few fence sitters to get involved. Finally, between all the crossing stochastics (sector indices/VXO) and further hair on the trinny TRIN TRIN, technicians will likely throw some hats in the ring during this "counter-trend" Tuesday.

Taking a step back, however, the picture muddles considerably. With the Dow and NASDAQ both down more than 3% for the young year, the potential for a further psychology shift is very much in play. As much as we don't like to admit it, our thought (and decision making) processes are often impacted by the color of our bottom line. If you extrapolate that to millions of investors, the migration phase of our minxy tri-fecta (denial/migration/panic) seems less "far fetched." Further, and leaving the bevy of bubbles alone for the time being, the chicken and the egg that is the economy and this market will likely perpetuate in many ways, shapes and forms. In other words, the longer this new found downtrend lasts, the more likely it will affect consumer spending and, eventually, the economy as a whole.

First things first, this is an expiration week and the "open interest" of outstanding options creates the potential for an exacerbation of volatility. More often than not, these swings occur during the days preceding the actual expiry as traders jockey their risk profiles and roll out paper. While March expiration has been "to buy" ten out of the last fourteen years, I've long maintained that it's difficult to gauge how these periods set up (as so many folks are gaming them). Suffice it to say, there will be a fair amount of crosscurrents on top of our normal metric base and stocks (with outsized open interest relative to average daily volume) will migrate towards their pins.

In a Elmerless session, my sense would be that these early green seeds would be faded (read: sold) and a probe (after yesterday's action) would briefly dip the Minx below S&P 1100 before a potential counter-trend Snapper. That script is certainly still feasible but with the 2:15 FOMC announcement looming--and everyone anticipating a yawner--we've gotta keep that right hand up for unexpected surprises. Just remember, Minyans, we could have a fairly meaty bounce and still find ourselves in the new found downtrend.

Good luck today.

R.P.

< Previous
  • 1
Next >
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.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE