The suck and duck, baby!
The Minx meandered out of the gate, kissed our initial support levels and has now entered a state of flux. As we wade into the day, I'm weighing the "they trade pretty dry" vibe against "the first rally is intuitive (after the recent jig)" vibe. While the dollar remains under pressure (down 1%), traders (thus far) seem reticent to make a downside bet. That mindset circles back to our "buy the dip" conversation and its ability to work -- until it doesn't.
I continue to watch the financials like a hawk and while the money centers are sticky, the brokers are a tad sloppier. It's certainly nothing egregious (yet) but I like to use this complex as a proxy for the sentiment/health of the overall tape. Meanwhile, pharma trades dry, retail is showing signs of life and defense is on the offensive.
I've got six-day charts up across the indices and they've all formed pennants (lower highs, higher lows). These aren't to be confused with the longer term flags we discussed earlier but, for the near-term horizon types out there, shorter dated charts are more applicable. A quick check of the morning breadth, meanwhile, shows losers marginally beating winners in both the N's and S's.
Is this the "suck in sell-off" before the much anticipated breakout? Or is the very promise of higher prices (and a reticence to sell) bearish in and of itself? These are the thoughts fluttering back and forth behind my eyelids and as I can "see" both sides, I'm trading a little bit "in-between" around my downside gamma.
As always, I hope this finds you well.
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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