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Lamp Shade

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Remember me?

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Last night I held Aladdin's lamp
And so I wished that I could stay
Before the thing could answer me
Well, someone came and took the lamp away


(Steppenwolf)


Good morning and welcome back to the bovine attack. It's been a long week for the Matador Crowd but they dug in their heels and made Hoofy proud. They picked and they grinned as they sucked up supply and when the dust settled they pummeled Red Dye. "The bears were all scared of the structural hair," said Hoofy the bull as he stepped up the stair, "but earnings were fine so you better beware as we ready anew for this minxy affair!" Can he follow through and take hold of this zoo or is his fifteen minutes basically through? We'll know soon enough as we ready to jump and prepare as we stare at the imminent hump!

I would like you to think for a moment about the last six sessions. After a prolonged churn under previous resistance, a post-FOMC minute pop (that lasted about that long) renewed optimism and sucked in a spate of bulls. The rest of the week was brutally painful and many of them were spanked instead of thanked. The reasons for that decline-concerns of a slowing economy, wobbly wheels on the structural wagon, technical malaise, the stag party-have now taken a back seat as focus shifts to the earnings avalanche that seems to be snowballing out of control.

We got the twin grin last night from Intel and Yahoo! as both bellwethers beat the Street. The Mother Chip, boosting their capital expenditure forecast, and the latter, citing a surge in advertising revenue, will look to pace the four-letter race. These two leaders may pave the way back to our aforementioned line in the sand (NDX 1460) and set up a showdown with some very hungry bears. Again, technicals are one of four primary metrics, but they've been a self-fulfilling prophecy as the fund community looks for a framework with which to craft their risk.

Over in the old school, it's a hectic morning as traders chew through their #2's. A slew of Dow components (including JP Morgan, United Tech, Altria and Caterpillar) all spew their dew and that'll shape the broader tape. Last week's "break" in the industrials (10,375) and the S&P (1163)-coupled with nosty breadth, crashing trannies and funky financials-shifted the burden of proof straight to Hoofy's shoulders. Textbook technical analysis dictates that the time to initiate risk is on a retest of those levels and that could arrive as early as this morning.

Will the recent spate of "things are great" offset the hate we've heard of late? That's the million dollar baby as we roll up our sleeves and dig in our heels. I've already heard traders opine that IBM was an "outlier" and General Motor's lack of vision-and I mean that in the worst way-is yesterday's news. It is in a literal sense, but I will humbly ask that you maintain perspective as we digest the other side of emotion. We've still got a ton of news in the pipe, plenty of technical cracks to spackle and a structural conundrum under our heels. One step at a time, Minyans, and please make sure that each one is measured.

I offered last week that Boo wanted the tape to test the underbelly of resistance and that may be today's business. He'll be eyeing that dynamic in the context of market breadth (was the tell once again yesterday), leadership qualities (semicaps, financials) and the macro muscle (reflation vibes). Remember, trading is about identifying an advantageous risk/reward and defining your profile as tight as possible. It's crowded and noisy out there but we're approaching a point that may offer that ever-elusive edge. Keep your wits about you, check emotions at the door and let's get ready to mount this Hump!

Good luck today.


R.P.

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