It's a metric-fest!
I wanna jam it wid you
We're jammin', jammin'
And I hope you like jammin' too
Well, here we are Minyans -- earning's week in the city of critters. Pretty much everybody who's anybody is gonna step it up and speak their piece and, after the recent war trading, it'll be nice to actually see some numbers hit the tape. As we discussed in this morning's first post, the fundamental metric will likely assume a greater weighting in our trading brew and, as such, we'll need to adjust our recipe accordingly. Tee it up Chef -- and let's get ready to cook!
In international news, the Japanese Nikkei slid to another 20-year low as the economic impact of the SARS epidemic continues to price into that market. While we're all quite busy, please keep a wandering eye on these developments in Asia. Despite the fact that the press has focused its attention elsewhere, there are widespread implications should this situation continue to deteriorate. Meanwhile, the European bourses are (thus far) steady and will continue to play cart to the pre-market futures horse.
In a quick check of morning research, Goldman downgraded AMR (AMR:NYSE) and lowered numbers Motorola (MOT:NYSE); Merrill punted the specialty retailers (Abercrombie & Fitch (ANF:NYSE), Coach (COH:NYSE), Gap (GPS:NYSE), Ross Stores (ROST:Nasdaq), TJX Companies (TJX:NYSE)) while upgrading OSI Pharmaceuticals (OSIP:Nasdaq); Monty initiated coverage of Wal-Mart (WMT:NYSE) and Target (TGT:NYSE) with buys; Smith Barney raised numbers on Dominion Resources (D:NYSE) and El Paso Corp. (EP:NYSE), while Jeffries booted HCA (HCA:NYSE). Also, please know that Dupont Photomasks (DPMI:Nasdaq) pooped late Friday night after we had already powered down.
Our technical zones remain a focus as the tape held right where it had to last week. S&P 860 and NDX 1020 remain first support while S&P 875-880 and NDX 1045 are the initial resistance zones. It's also worth noting that the banks (BKX) and brokers (XBD) are sitting on fairly important support zones of their own.
Speaking of the financials, Bank of America (BAC:NYSE) and Citigroup (C:NYSE) reported "better" earnings numbers this morning, while revenues came in a touch light compared to expectations. Fannie Mae (FNM:NYSE), meanwhile, handily beat the street, although CEO Franklin Raines opined that he is "seeing the housing market cooling." I'm long puts in some of these names, and as it stands, my strategy remains the same. I was to add (puts) into strength and make some disciplined sales if they fail (trading around a short bias).
While all eyes are on the fundies, we must continue to respect the macro tells (structural metric). The dollar, crude, bonds and gold will all help shape the price action today and should remain a focus. The financials are also key here as the technical and fundamental metric collide head on. Watch Citigroup, Fannie Mae, Bank of America and Goldman Sachs (GS:NYSE) in that complex. Peripheral tells include the semis (Novellus (NVLS:Nasdaq) tonight, Intel (INTC:Nasdaq) tomorrow, retail (Wal-Mart), Microsoft (MSFT:Nasdaq), which reports tomorrow and our trusty breadth.
I hopped to work this morning with one leg in my metaphorical bear costume (25% conviction on the short side) and I want to see how the Minx responds to this morning's earnings. I've been trading the financials my entire career and I know that good reports don't always lead to good days. They might buck the trend this time but, for my part, I want to watch how they trade for a few hours before passing judgment.
Finally, and before we become nutty nuts, I have to once again give snaps to the job Casey did on the critter artwork. If you've got kids -- or even if you don't -- you might want to take a gander at the Gallery of Arts and sneak a peek at the posters. They're phenomenally framed, professionally mounted and they look awesome! Of course, we've come to expect nothing less from Casey as she spoils us with her considerable talents.
Kick some arse 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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