A Glimpse into the Buzz
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As some Minyans prefer only to read the News & Views, I thought it would be helpful if I shared some content from today's Buzz & Banter.. Please note that the content is chronological (scrolls bottom to top).
10:41 Note the spike in the VXO - it's up nearly 13% at 21.33 (John Succo-no positions)
10:40 I can't speak for the PnF indicators, but for the more "classical" technical indicators like MACD, ROC, stochastics, etc., a sideways or even slightly up move in prices can occur while these indicators "correct" themselves from oversold to a more neutral reading. For a good example of this, check out any daily chart of the DOW or the SPX from March 2003 to January 2004: you can see the MACD, stochastics, etc. "correct" their overbought condition by moving to neutral/slightly oversold while the price of the index did not correct itself. In Elliott wave terms, this phenomenon, while rare, does happen. Demark indicators, too, implicitly allow for this via something called the "recycle" rule. In any case, technical indicators can move off their overbought/oversold levels without any meaningful change in prices. It just means that the primary trend is very very strong. Just like March 03 to January 04. (Scott Reamer--no positions)
10:38 We're seeing a customer sell 1,500 SPX May 1050 puts and buy 1,500 of the Jul 995 puts (Greg Collins-no position)
10:32 Perhaps Scott or Kevin could explain better than I if or how an oversold condition could work itself off without a rally. (John Succo-no position)
10:27 Big Blue (IBM:NYSE) is still black and blue - it's teetering near recent lows (85.12). That low lines up coincidentally right around the lower end of the channel. (Greg Collins - no position).
10:27 I'm watching the semicaps with one eye and they've been steadily grasping for traction all morning. Remember that Applied Materials (AMAT:NASD) reports tomorrow. (Todd Harrison-no position)
10:26 Three little twigs-1) Please note that as a function of this morning's lower opening, there are now upside gaps (vacuums) in both the S&P and NDX. 2) Make sure that you saw my Buzz at 10:17 regarding the geopolitical news. 3) If Hoofy makes a stand at these levels, the bulls will proudly proclaim that the S&P successfully retested last week's low. (Todd Harrison-position in qqq)
10:22 The cyclicals (CYC) are testing the 200 dma (634.15). (Greg Collins-no position)
10:21 We're seeing a seller of 650,000 XLE (Energy select sector spdrs) (Greg Collins-no position)
10:19 The homies (HGX) are edging thru the 200 dma (350.55) - eyeing the lows around 340. (Greg Collins-no position)
10:19 Kevin Depew and I were just IM'ing about his PnF indicators and what they are saying here. Kevin and I spoke a lot in the March 2003-Summer 2003 period, discussing how overbought all of his (and my) indicators became with nary a correction. Wouldn't it be interesting and "orderly", I observed, if the same thing, but in reverse, happened now? With everyone looking for an oversold bounce, wouldn't the market - in classic "balancing" fashion - be surprising the most people with an oversold condition that stays oversold and does not produce a bounce that everyone is expecting? The same way the market stayed overbought and did not produce any meaningful correction from March 2003 - March 2004. He agreed. Such action would be entirely fitting from a Fibonacci/internal order standpoint. We shall see... (Scott Reamer-no positions)
10:17 Reuters is reporting that the US Military says it found artillery round loaded with sarin nerve agent in Iraq. That news could trigger some newbie shorts to cover up. Silly...but possible. (Todd Harrison-no positions)
10:15 The drugs (DRG) continue to trip along support / 50 dma (328.86) (Greg Collins--no position)
10:12 "If all economists were laid end to end, they would not reach a conclusion." --George Benhard Shaw. (John Succo-no position)
10:12 If Snapper is gonna trapper, this is where he'll likely live (S&P 1076-79). Do I think these levels ultimately hold? Nope. Could they hold this try? Yeah, they can do whatever they want. Watch crude. (Todd Harrison-no positions)
10:05 Let's see--Nazz Breadth is 8:1 negative (NYSE 3:1), global equity markets are melty (we just took out last week's NDX low), Citigroup (C:NYSE) is fighting for its technical life (at $45), bonds are jumpy (but off their high) and the dollar index is down more than a percent (and sitting on 200-day support). the best part? I had no systems all weekend and one screen thus far today. I'll betcha that the I.T. Gods are laughing their bananas off! (Todd Harrison-position in c, qqq)
10:04 The biotechs (BTK) are edging thru support at 500 and testing the 200 dma (493.09) on the Protein Design Labs (PDLI:NASD) blow up resulting from the failure of a phase II trial (off 9%). (Greg Collins-no position)
10:03 Everything in life is a trade-off: You risk X to get Y. This is how a trader thinks. If we look at the situation in Iraq it becomes painfully clear that while the reward for success may have been great, the risk was clearly under-estimated. Chaos theory dictates that little things that go wrong can and will multiply into things that are big. (John Succo-no positions)
10:01 The Philly Gold & Silver Index (XAU) is posting gains of 2.5% - again testing $83.20ish resistance where it failed a few times recently. (Greg Collins-position in silver).
The scroll continues from 6:30 am...
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 email@example.com.
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