I haven't taking a beating like this since I put a banana down my pants and turned the monkey loose!
And it's whispered that soon if we all call the tune
Then the piper will lead us to reason.
And a new day will dawn for those who stand long
And the forests will echo with laughter.
Talk about a bearish convergence! The S&P five day trendline was violated just as Warren Buffett issues cautious commentary on equities. We know that the long side is relatively crowded--we've seen nothing but call buyers in tech--now we've got to watch how they respond to the sell pressure. If they're REAL buyers, they'll use this weakness to add exposure. If the reactive theme continues, however, they'll likely turn seller lower. Stay on your toes!
The Semiconductor action is dominating the tech tape and the bears seem like they've got the upper hand. Again, we saw nothing but call buyers heading into this conference and we wondered aloud if the long side was crowded. As it stands, the hedgies are "selling the news" and that's driving the index (and sentiment) lower). The scary part (for the bulls) is, the stochastics have barely even budged on their negative "hook."
There are some positives nestled in the muck. The NYSE breadth is still flattish, the banks are relative outperformers and the retailers, despite their earlier slippage, have stabilized. Still, the five day uptrend is history and the bulls are backtracking towards the previous higher low. For those of you keeping score at home, the previous "higher lows" (since the February 13th "bottom") are S&P 832, 827, 820ish and, finally, 806.
The Morgan conference continues tomorrow with IDT, MRVL, JBL, TXN, MOT, KLIC, MCHP, XLNX, AAPL, LSI, ATML and NTAP (among others) all presenting. In addition, the mighty Bear has their media conference (CCU, NWS, FOX, AOL, VIA, GMH, ERTS, AOL), Solly is hosting DELL, we've got the XLNX update and there are XOM and FDC company meetings. In other words, it's only just begun Babs!
Apologies for not elaborating on that "nasty feeling" earlier but it hadn't fully crystallized in my crowded keppe. I've tried to be forthright and consistent with my view such that I'm discussing it with you rather than talking at you. Remember Minyans, this is an educational community and not an advice site. I'll always give it to you straight but I'll never tell you what to do.
With that said, I've still got the scrunched up nose thing going and I can't put my finger on why. Perhaps it's the "hope" built into the tape, maybe it's the stochastic sell signal in the SOX or it could have something to do with the churning under resistance. Whatever the case, something smells funky and I'm staying light and tight. I'm still tradin' em, mind you, but I'm erring to the side of caution and taking my shekels when I can find 'em. Pea shooter Toddo!
I've got a midtown meeting on the bell so this may be my last post of the session. I've still got that paw in my bear costume and I'll likely hop home with it in tact. I know it's not the razzle dazzle some of you have come to expect but I strive to make this column an extension of my thought process and my risk profile. Slow and steady, baby, slow and steady.
Finally, I've got to once again thank you ALL for putting our best foot forward for charity. It was truly an honor to represent Minyanville at yesterday's bowl-a-thon and it's only just begun. In the months ahead, we've got some fantastic philanthropic efforts planned and that, my friends, is what it's all about. Good luck into the close and remember to think positive. We'll get there.
Have a peaceful night.
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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