By Todd Harrison Jul 28, 2003 7:56 am
Quiet weeks are often left to interpritation.
The night of the fight, you may feel a slight sting. That's pride messin' with you. Forget pride. Pride only hurts, it never helps.
Good morning and welcome back to the peppy pulp. With Friday's late left hook, Hoofy sent a befuddled Boo packin' for a long and lonely weekend. Armed with a vicious combination of fidgety shorts and technical support, the bovacious one, lit up the furry phantoms and gave 'em a good old fashioned thumpin'. It was a wicked end to a wily week and changed the completion of the previous projection. The crowd, who had been focused on the floor below, was now staring at a ceiling that suddenly looked appealing. Will the bulls finally pierce the top of the recent range or will a renewed Boo reject Hoofy's spirited crew? It's a new week in Minyanville, ladies and gentleman, so take your seats and let's get ready to rumble!
There are plenty of rhymes for every reason and the weekend press was filled with poetic justification. The economic data and earnings blather were just fine, thank you, and a renewed confidence is in vogue. To be sure, the lift was a gift to the technicians in our midst as it staved off a double secret violation. By the end of the session, the S&P 50-day moving average and NDX uber-trendline were not only in tact, they were golden in their rule. That buoyancy was all the bulls needed as they rode a thin Friday to the weekly high.
To be sure, there are plenty of reasons for the market to fail and if (and when) it does, it'll seem most obvious. Still, as we view the big picture as a series of little pictures, the current snapshot may offer flaws in the paw's cause. We've been relatively range bound since June and the summer ho-hummer is either a healthy digestion (basing) or a reason for question (churning). The ability of the indices to decisively break out of the recent range (either way) will trigger a reactionary migration from the gorillas in our misty midst.
Such is the dilemma of our profession, the constant reassessment of technical evolution vs. the application of one's beliefs. If the averages ride the tide through the recent highs (S&P 1015, NDX 1320ish, Dow 9350ish), the bulls will declare "game on" for an end of summer run. At that point, each Minyan must decide for themselves if there is sufficient evidence in the collective metric base to warrant a long posture. While there will surely be towel tossing by the ursine underachievers, I will remind you (if and when) that the potential for false breakouts always exists--especially when everyone in the free world is watching the same levels.
I remain of the belief that we're NOT on the verge of a new bull market and when the dust settles, this phase will be the most bitter pill to date. What I haven't quite wrapped my arms around is the oompha aspect of the liquidity fluidity that's been muscling the tape higher. I sense that the upside is close to having run it's course but unknown variables remain. As such, we must respect (but not defer to) the price action, understand that perception dictates reality and dutifully assimilate our trading metrics. If (big if) we push through resistance, the bulls will sport yet another feather in their rally caps. We're not there yet...but that's what they're gunning for.
The bovive will attempt to harness Friday's momentum and ride that energy through S&P 1000 (first) and then S&P 1015. That's the plot du jour and it'll set the pace for the rest of the race. The sub-indices will vie for attention and the ability of any of them to break out will likely embolden their brethren. The ursine uglies have a plan up their sleeve as well, and they'll flank the technical resistance zones with gritty determination. Such are the battles in this business and while the war is far from over, this particular offensive will likely result in a lot of casualties.
A smattering of earnings and a dose of economics will offer peripheral inputs but make no mistake, this battle is for field position. He who wants it more will take it, and when the sword falls from the last steed and one victor remains, he shall have the charge of an army behind him. Good luck, Minyans, fight with honor, believe in yourself and above all else, think positive. It all starts within.
Good luck today.
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