Sweet blossom come on under the willow
We can have high times if you'll abide
We can discover the wonders of nature
Rolling in the rushes down by the riverside
The frazzly fray continues today as the vicious crosscurrents whip through Minyanville. The constructive economic data gave the Minx a snazzy tone out of the gate and the rising tide lifted most boats. As the morning evolved, further themes have begun to develop--the SOX got a bit soft (in front of KLA Tencor (KLAC:NASD) earnings), the biotechs are a battle (Biogen (BGEN:NASD) and Fokker is the absolute best! (is that better, Greg?)
All the while, the breadth doesn't budge and the short-term technical picture is in tact. Despite my big picture bent, I've been trading the market from the long side today (vs. my puts) and using uber-tight stops on that merchandise. The internets continue to act as a psychological harbinger and while I may not agree with the action, I am using it as sentiment proxy. My best guess is that they try and push through S&P 1000...but if they don't form a base above that level by the early afternoon, a more cautious stance may be warranted. There are a TON of earnings tonight and the potential for posturing (into the close) exists.
A few Minyans have asked me to elaborate on gap fillage and in the vein of education, I'll use a real-time example. Pull up a 14-day chart of Yahoo! (YHOO:NASD) and note the gap that was created when they announced earnings July 9th. In a textbook gap fillage situation, a move through 33 sets up a "vacuum" to 35ish. In the interest of full disclosure, I'm involved (and actively trading both ways) but wanted to respond to the Minyan mailbag. Hey, we aim to please!
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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