Eminem Makes Friends
Who are you calling a dog, dog?
Snap back to reality, oh there goes gravity
Oh, there goes Rabbit, he choked, he's so mad, but he
Won't give up that easy no, he won't have it, he
Knows his whole back city's ropes, it don't matter
The Elmerfest hits the wires and the ISM stood out with a weaker than expected reading of 46.2 (vs. exp. 49). I heard whispers as low as 40 but, regardless, this is a soft number. The initial dip (lower) gave way to a quick blip (higher) that triggered some buy stops... and now the Minx is settling in for a new day of trading.
The retailers act relatively heavy (Best Buy (BBY:NYSE)), the banks are holding an early bid, the macro indicators are (marginally) equity positive, breadth is better in the old school (S's over N's) and traders are gunning for buy stops (above yesterday's late session highs). The flow I've seen (thus far) is primarily short-covering but if we've learned anything, it's that reactive traders become emboldened by the price action (either way). Keep an eye on bonds, dawg, as the alligator chatter is starting to circulate.
The key metric as we enter the second quarter is once again psychology. If investors are willing to give companies (and economic numbers) a free pass as a function of war, the "they don't go down on bad news" crowd will get loud. As many traders have (painfully) learned, there's risk in buying (or shorting) something based purely on price action. Remember, we must always respect the price action but we can never defer to it.
What are my directional thoughts? I still get the new lows itch but I'm unsure if there's a trade higher first. As such, I'm gently nibbling on May puts (again) and will look to set up some gamma if the need arises. This next hour or so is important for the daily action and I'm carefully eyeing the breadth, the banks and the semis for short-term guidance.
I'll be back.
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