Watch S&P 875 on the upside as first resistance.
It takes dynamite to get me up
Too much of everything is just enough
One more thing that I just got to say
I need a miracle every day
Good morning and welcome back to the show. The psychedelic market tripped hard yesterday, seemingly stumbling over a fallen statue of Saddam. It was a surreal session, to be sure, as symbolism dripped from each flickering tick. In an effort to assign a reason to the rhyme, the critters took Mr. Joisy to the Four Seasons last night to meet their favorite gaggle of Grey Geese. The conversation went something like this:
Daisy: First of all, we want to thank you again for your most generous pledge to The Ruby Foundation for Children's Education. There are people out there who equate success with profitability and lead very shallow existences. You clearly "get it," and that's awesome!
Mr. Joisy: Yo, thanks Daisy -- I try. Yoose guys are doing a fine thing with 'dem kids and I am proud to be a part of it. Fuggetaboutit!
Boo: Yeah, that was cool Turnpike boy, especially in an environment like this. Did you see that reversal yesterday? Everybody and their sister climbed on board the rally train for the party in the square. Once the cookie crumbled, traders were looking for the next best bid. When it didn't emerge, there was a bottleneck at the exit.
Mr. Joisy: Yoose think we seen the near-term high?
Sammy: (cutting off Boo) I think we may have seen the near-term high near Monday's euphoric opening. A lot of bulls bought into that rally (literally) and held onto the notion that the pullback merely filled the gap (bullish). In the process, a seed of doubt was planted in the mindset of the masses. When they didn't hold the lower gaps (yesterday), the selling intensified.
Hoofy: What if this is the "half step back" before the next stride forward? The internals weren't that bad yesterday, considering, and for the majority of the day, the financials had a bid. Besides, I'm hearing that a $1.4 billion hedge was put on in the S&P yesterday and that likely contributed to the sluggish action
Boo: Big deal! Did you see how heavy they closed the banks? It's as if the buyers walked away at 3:30. Hey, wait a minute, don't corporate buy backs end at 3:30? Do you think that had something to do with it?
Toddo: Not the silliest thing you've ever said, Boo, but I don't know the answer to that. I will offer that the market will find her next support around S&P 850-860 and NDX 1020ish. That fills the gap from April 2, and places the Minx right on the lower band of her trading range. IF (big if) they slip through those levels, things might start to get interesting for you.
Snapper: Well what about the overnight news?
Sammy: I'm hearing that Monty is downing HCA (HCA:NYSE), Goldman is upping Sonus Networks (SONS:Nasdaq) while punting AMB Property (AMB:NYSE), JP Morgan is downgrading Expeditors International (EXPD:Nasdaq), Merrill kicked Fox Entertainment Group (FOX:NYSE), UBS Warburg booted Argosy Gaming (AGY:NYSE), the Xilinx (XLNX:Nasdaq) CEO said the chip industry is in for a slow recovery, Wal-Mart (WMT:NYSE) lowered guidance and Yahoo! (YHOO:Nasdaq) raised guidance.
Daisy: How would you possibly know all that, this is supposed to be taking place last night?
Boo: Shush, Daisy, we're jamming for time and need the poetic license!
Mr. Joisy: Are you still bearish, Toddo?
Toddo: I've got one leg in the fur (25% conviction on the short side) and I'm curious to see how the Minx acts as she tickles the lower end of our recent range. Yesterday I added some May puts near the opening (as a function of discipline) and reduced some exposure into the closing melt (again, discipline). I've still got a smattering of paper on (vols cheapish) and if I get the twang, I can always set up some day trading gamma.
Boo: Don't you think that, with the war victory priced in, investors will shift their focus to the economy and the looming earnings?
Toddo: The key here, in my opinion, continues to be the structural metric. Equities will likely take their lead from the dollar, bonds, crude and, to a lesser extent, gold. I'll also be watching the financials like Goldman Sachs (GS:NYSE), the retailers (Wal-Mart), the semis (Xilinx), Yahoo! (reaction), Microsoft (MSFT:Nasdaq) (heavy yesterday), and the breadth. A'ight?
Snapper: Coolio. Now let's blow this taco stand and find some trouble, Toddo. It's not often we get to go out with a guy as classy as Mr. Joisy!
The bill came and, shockingly, all the critters turned and looked directly at me. I guess I shouldn't be surprised -- it is, after all, a tough market. I dropped a few finskis on the table, grabbed my coat and led the Menagerie through the crowded room. While the critters zigged to a nightclub, I zagged and made my way home to bed and got some rest. Something told me I was gonna need it.
Good luck today.
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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