Technical levels weaken each time they are tested.
Monsieur Beeks dropped by with the Consumer Confidence (or lack thereof) and on his signal, Boo opened a can of whoop ass on the bulls. The initial knee jerk lower was the obvious and intuitive move. THE question for my fellow Minyans is whether the bulls can digest this number and shrug the tape higher. Here's what I'm looking at.
The first flavor I attempted to taste was the nature of the flow. The scared bears are always the initial bid as they run to cover their shorts. Once they did their thang, I sniffed around for "real" merchandise, or legitimate gorillas who can and will impact the supply/demand equilibrium. As of this post, I've seen 'some' nibblers (particularly in the cyclicals) but, other than that, it's been surprisingly quiet.
The next thing I peeked at is our technicals. Daddy's nemesis, the 50-day moving average, is lurking below at S&P 981 and in case you were at the beach last Friday, lemme assure you that it's a level of contention. The bulls will be using that as a "backstop" (to build long exposure) and the bears will swarm if that zone is violated. Keep it, along with NDX 1250ish (trendline), on your trading radar.
We've discussed the (bearish) conditional elements in place and they continue to flash crimson red. As it stands, we're still (very much) in the recent range. If we sneak through to the downside, however, bottleneck potential exists. Don't anticipate the anticipator but be very conscious of the physical graffiti. If we violate, the writing will be on the wall.
I'll be back.
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 email@example.com.
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