Even Babe Ruth struck out once in a while!
I make my living off the evening news
Just give me something--something I can use
People love when you lose
They love dirty laundry
Holy guacamole, Fokker, what the heck did Boo eat for breakfast? The bears are swarming, the breadth is drekky, financials are fugly and there's a legitimate tech wreck in our midst. This, of course, begs the obvious question: Does a chicken have lips? Oops, wrong question...what we really want to know is: Is this pullback still "healthy?"
Every critter in existence was focusing on our trusty support levels (NDX 1260, S&P 984ish) and when they "broke," the floodgates opened. In a span of five minutes, I was "hit up" by five separate firms with multiple sixes for sale in SPY and QQQ (read: six figure orders). I see what they see--a rain of pain--but from a purely technical perspective, we can't put a fork in this beast...yet. Watch S&P 950-965 (NDX 1250) as lines that Hoofy will attempt to toe.
With that said, there's plenty of room left in Boo's bag of tricks. While Hoofy yawns (VIX?) and sentiment remains complacent, we've seen some meaty supply in the marketplace. When names like Nokia (NOK:NYSE) are down 20% and International Business Machines (IBM:NYSE) is looped for a nickel, it tends to get the keppe cookin'. Yes, the industrial names (and specialty pharma) are acting fine, thank you very much, and that likely has to do with S's over N's rotation we identified this morning.
What do I honestly think? Consistent with what I've been communicating, I believe the market should be lower. It's my (most humble) opinion that Elmer helped manufacture the rally with hopes that it would spur spending and growth. He knows, as do I, that the stock market is the single biggest thermometer of American psychology. If the masses perceive that the worst is behind us, they're more likely to loosen their purse strings and create a self-fulfilling expansion.
It's an incredibly dangerous bet he's making (again, my personal view) but--and this is important--he has the muscle of the global central banks behind him. Thus, it's nearly impossible to tell when the liquidity spigots will dry up and reality will again assert itself. I will say this--the bull camp is crowded, there's widespread complacency, valuations are pricing in an "inevitable" second half recovery, geopolitical risk remains (yes) and there are structural situations that warrant attention (Fannie Mae (FNM:NYSE) and Freddie Mac (FRE:NYSE). Play the tape anyway you'd like but please, always see both sides of every trade.
That's about it from the perch as Fokker and I chew through the afternoon. Mother Microsoft (MSFT:NASD) headlines another active after-hours earning session so understand the potential for end of day posturing. Also, I've got a hairy afternoon tomorrow so I'll pen my opening thoughts and then I'll be "in touch with." With the superstar lineup we've got over in News & Views, I'll doubt ya even miss me!
Good luck into the close, my friends, and fare ye 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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