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Past Tense


I, for one, will be happy when all the Greeks expire on Friday.


You who are on the road
Must have a code that you can live by
And so become yourself
Because the past is just a goodbye.


Good morning and welcome back to the critter shack. The Hump Day reversal sparked fear universal and planted the seed of a further rehearsal. The bulls surely thought that the table was set but they failed to respect the imminent threat. "I knew that the dealers would have to buy higher," said Boo to his crew as they sat by the fire, "but they didn't have the force they required to power the tape from wire to wire!" Was the bearish formation an ursine salvation or simply a function of May's expiration? We'll know soon enough so breath deep and just chill as we ready ourselves for a romp through the 'Ville!

The popular press was quick to assess that oil and rates were cause for this mess. While that certainly contributed to the action, we're a bit more granular in the city of critters. The monstrous negative gamma offered the backdrop, technical resistance (BKX 95/S&P 1108ish/DOW 10K-10300) made the tape stop and alligators caused the final plop. When it was all said and done, the opening gaps were filled and the only thing we had to show for the day was a desk full of hair.

Citigroup (C:NYSE)--and Kla-Tencor (KLAC:NASD)--both went bowling for squalor yesterday as they pinned their respective strikes. While they could have broken away from the pack, they seemed to be looking over their shoulder all session as if they were being serenaded by a sexy siren. Those tells, coupled with the tranched index resistance, a reversal in the biotechs/transports, gap fillage (and the understanding of negative gamma) all helped fit the pieces into the puzzle. I know it's a lot to digest but I'm hopeful that by sharing my eyes, you'll gain some clarity as you peer ahead.

We've now arrived at a critical juncture as everyone (and their sister) has stops set beneath last week's lows (S&P 1076/NDX 1372). That is the "meaningful reversal while really oversold and sitting on support" argument and it'll remain in play until we breach that zone. I'm suspect of the S&P 200-day as many of its components are already trading below their comparable levels, lotsa folks are staring intensely at the same price point and the Bopsie twins (Carrie and Fanny) are still floating around. What I haven't resolved is whether the current perception will usher in a more meaningful upside reality first.

We power up the Thursday pup to find a marginally stronger greenback, slightly pink metals (on the heels of yesterday's jig), some give back in Asia, the softer side of Europe and flattish stateside futes. While we filled the most recent gap (bullish), please be aware that the shopping mall has a sale on vacuums and we're staring right into Tuesday's Hoover. If those begin to fill, we'll be looking at S&P 1084 and NDX 1380. Are we clear? Yes sir. Are we CLEAR? Crystal!

Good luck today.

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