Those darn banks hold the key!
It's a little trippy out there right now but I wanted to get a quick post out to my fellow Minyans. The S&P filled the opening gap (to 890) and spooked some of the "faster money" longs who chased the tape last night and this morning. It's entirely too early to script the rest of the session but a few themes are starting to emerge.
The pharma complex (drugs, biotechs, specialty) and the retailers stand out on the sell side and that's consistent with our earlier N's over S's observation. The banks and brokers hang tough, meanwhile, and in my estimation, remain the most important complex in the market.
Over in four-letter land, the semis tell the tale and they're buoying tech sentiment. As discussed, the field position in SOX land is much better than other sub-sectors (stochastics confirmed a buy signal) and, as such, they're less vulnerable to an overbought pullback. Finally, please note that Microsoft (MSFT:Nasdaq), while firm, is struggling to break free from the magnet of the April 25 line (options).
A quick check of the morning breadth shows "constructive" internals although they're far from what we would have thought at 6 p.m. yesterday. The flow is fierce and two-sided as I'm seeing size QQQ buying and size QQQ put buying. Also, please keep an eye on the dollar as it's trading lower (and on it's trendline) -- and that fact is getting loud in European trading circles.
Watch S&P 890 as support -- if Hoofy and Snapper are lurking, they'll prolly sneak a peek around there.
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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