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Hump Day Trading


Look for N's over S's today


It's another jam-packed morning in Minyanville as earnings are the gifts that keep on giving. Thus far, by and large, the reports have been solid (relative to expectations) and that should be factored into our respective metric brew. Curiously enough, the premarket futures have been grinding lower (off their highs) as these companies paint the tape and that leads us to the natural question: Are they telling us something (heavy) or is this Boo's chance to pare exposure?

It's clearly too early to tell but I will offer that the contacts I spoke with feel that the macro community will try to push the tape higher. As we've learned, that's either self-fulfilling or it will lead to a further crowding of the long side. My sense, and this is just a feel, is that if money is to rotate into tech, it may come at the relative expense of the old school names.

In our real-time QQQ example we discussed yesterday, I entered last nights earning's barrage with 1000 QQQ April 26 puts and 25000 QQQ (gamma). As the reports were released and they weren't as bad as whispered, I added another 25000 QQQ to bring my total ratio to 2:1. What this basically means is that I'm long 50000 QQQ above 26 and, if I keep the current ratio, I'd be short 50000 QQQ under 26. This is clearly an oversimplification (and by no means a recommendation) but I wanted to keep interested Minyans updated. For purposes of disclosure, I will likely be "trading around" this position as a function of price.

In morning research, Smith Barney dumped Prentiss Properties Trust (PP:NYSE), JP Morgan upgraded Amdocs Limited (DOX:NYSE), Lehman downgraded Starbucks (SBUX:Nasdaq), First Albany downgraded Intel (INTC:Nasdaq), Merrill exited Roadway (ROAD:Nasdaq), CS First Boston upped Ryder System (R:NYSE) and UBS Warburg kicked Millennium Pharmaceuticals (MLNM:Nasdaq) and MBNA (KRB:NYSE).

In chart land, everyone seems to be focused on S&P 905 and that's likely a level that the macros will shoot for (if they're playing the game). If they reverse, S&P 890 (opening gap) and S&P 875 (trendline support from March 31) will act as support. In tech, NDX 1085 is an area of upside resistance while NDX 1060 (opening gap) will act as first support. And please keep an eye on the dollar and the financials as chief trading tells today.

I'm jammin' and jugglin' this morning so lemme jump and get ready for the morning flurry. I sincerely hope you all have a prosperous day and we ring the closing bell with some jingle in your jeans. More importantly, I want to take a moment to with a happy holidays to ALL of my fellow Minyans. Whether you're celebrating Passover or Easter, may you have a peaceful and enjoyable time with the fam.

Fare ye well.

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