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Dust in the Wind

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Who ya calling heavy!?!

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Hello ruby in the dust
Has your band begun to rust
After all the sin we've had
I was hopin' that we turn back


(Neil Young)

Good morning and welcome back to the earning's attack. With yesterday's stand at our lines in the sand, the Minx avoided the creation of technical indignation. Indeed, you could see beads of sweat forming on Hoofy's brow as the S&P hugged it's 50-day moving average (first time since March) and the NDX kissed THE uptrend line (from the March lows). With traders itchy and the tape twitchy, the "kiss of death" was all the bulls needed as they turned and stampeded.

After the run we've seen, the bovine weren't gonna abandon their posts without a fight. With the NDX surrendering 85 points (and the S&P shaving 40 handles) in seven short sessions, a contingent of bulls and turtles were lurking in the shadows. The double secret technical support zone was the perfect spot for them to mount an offensive. As we know that tops are processes (while bottoms are typically points), we must now ascertain if this was the beginning of (yet another) turn higher or a simple upside burp before further distribution.

On the bullish side of the ledger, the NDX uptrend and S&P sideways channels are both in tact, leadership groups (BKX, XBD, SOX, BTK) have pulled back from extended levels, sentiment remains manic (Investors Intelligence bulls 55.2 (vs. 57.4) and bears 19.8 (vs. 17)), there were glimmers to grasp (in the earnings), performance anxiety remains and Elmer has an agenda.

On the flip side, the S&P gave a sell signal (20-day vs. 30-day moving average), sentiment remains manic, earnings are simply a numbers game (vs. reduced expectations), end demand remains a wild card (particularly in tech), complacency is everywhere, the recent run has priced in a robust recovery (not happening) and the prospect of higher rates could crimp psychology.

We'll need to keep these (and many other) variables on our trading radar as we wade through the considerable muck. In the meantime, I'm gonna key off the biotechs (BBH 132ish has been support), NDX 1270 (uber-short term breakout), S&P 995 (same), the brokers, the semis and the breadth for directive. I wanna be more bearish (as I'm not a believer) but I'm respectful of the action and elements in place. I've got a few situational longs, my requisite defined risk puts and plenty of powder if I choose to unleash the hounds.

Jammin' a little this morning with the earnings, so lemme hop and put my other hat back on. I will offer that, on the heels of Amazon (AMZN:NASD) and Amgen (AMGN:NASD) earnings, I would have thought the futes would be jiggier. It may be too early to draw conclusions but, in the past, that's been indicative of stealth supply.

Good luck today.
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No positions in stocks mentioned.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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