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Puncture Wound

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Technical levels weaken each time they are tested.

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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.
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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