I guess this is what happens when you put an A.D.D critter in a sensory overload environment!
But you will come to a place
Where the only thing you feel
Are loaded guns in your face
And you'll have to deal with pressure!
There is an amazing amount of information coming through the morning pipes and rather than scribe my normal vibe, I'm gonna hop around and sniff at the state of the union. Between the avalache of earnings, breakfast with Beeks, lopsided levels and jittery critters, the Tuesday soiree promises to be chock full of nuts. Grab those floppy feet and toss on that red rubber nose, Minyans, as we ready to juggle the struggle together.
Oy, where to start. Texas Instruments (TXN) started the party last night with a spark in the dark and offered that the semiconductor landscape "is improving" and he feels "very good" about inventory. Given the rececent semi dip shtick (-14% since March), this news was embraced by the Matador Crowd. To quote and note Professor Phil Erlanger on last night's buzz, "Short intensity in Texas Instruments remains high relative to its 5 year high and low at 100%. If the bulls like the news, there is room for this name to run over the next few days." True Dat, Pockets, as the stock is trading 5% higher in pre-market trading.
On the other end of reality, the Novellus (NVLS) CEO opined on last night's call that he was worried about the rising price of crude. I'm worried too although, if I were him, I'd focus more on his order growth (which left a lot to be desired) than how much money it costs to fill up his Beamer. Still, as this is a big name in the SOX (it actually has a higher weighting than TXN), we'll need to keep it on our radar as we edge ahead. Also keep in mind that 1) SOX 383 is the January low (where we bounced yesterday and 2) the Mother Chip will land this afternoon and stake her claim to technology fame.
As we cruise along the morning news, the earnings are coming out fast and furious. I'm still digesting the Festivus of fundies although-at first glance-stalwarts such as Pfizer (PFE), Coke (KO) and Merrill (MER) seem a'ight. The biggie, of course, is General Motors (GM) as folks look to comb the structural hair from this financial beard. Brian Reynolds, among others in the 'Ville, has been all over the potential imbalances in the corporate debt market and that shoe continues to tap behind us.
The orange crop report will arrive this morning (in the form of the PPI) and all eyes will shift to Clarence Beeks. The question, of course, is whether we'll see an uptick in input prices to further stoke the inflation side of the stagflation equation. The other end of the spectrum is the deflation side (wage/consumer/manufacturing) and that seems to be edging into the mindset of the masses as well. Clowns to the left of us, frowns to the right and here we are-stuck in the middle of pooh.
For purposes of the journey (rather than the destination), we'll continue to walk a tightrope between perception and reality and therein lies our path at hand. If we can toggle between these two bogies, there are windows of opportunity for Hoofy to dance and freshly romance. It's the definition of waltzing between the elephants, in my view, but that doesn't mean it won't happen. Ultimately, I maintain that we'll have to choose between the crutches of fiscal and monetary support and the daunting dilemma of a devalued dollar.
S&P 1163 and NDX 1460 remain two (of the many) upside lines in the sand. Whether or not we get there is another story-Boo knows a fair share of bears who were left holding empty honey jars awaiting a retest of S&P 1200 (that never fully arrived). Still, as our goal is to identify advantageous set-ups and tactically deploy our hard earned shekels, that's an area that I'm eyeballing as we edge anew into the muck.
The mainstream media was quick to pick up the notion of "stability" yesterday but, given the technical damage, this action smells more like churning (not basing). In other words, and while this is one trader's humble opinion, I'm more inclined to give the tape some room and fade (read: sell) rallies rather than pick bottoms and make a stand. And as always, I will adapt that strategy as I read my tea leaves (breadth, financials, beta, small caps, cyclicals, macro) and remind myself that the only religion in the financial markets is that of discipline.
I'm slammy and jammy, Minyans, so I'll see you over on the Buzz.
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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