Slow Times at Minxy High
Linda couldn't hold a candle to me!
"I can see it all now, this is gonna be just like last summer. You fell in love with that girl at the Fotomat, you bought forty dollars worth of friggiin' film, and you never even talked to her. You don't even own a camera!"
--Mike Damone, Fast Times at Ridgemont High
Mr. Beeks stopped by the city of critters--evidently looking for Mr. Hand's Job--and dropped off better than expected retail sales data (with or without cars). That propped up the morning futes and sent Hoofy scurrying to the cabana bathroom. Is this something for him to get excited about or are these firmer reports the reason behind the spring zing? The obvious question now becomes: Is Boo gonna schvitz....or is he gonna kill us?
The financials should tell the tale for the old school while the semis (which have been heavily shorted recently) will offer tech color. While it feels as if the bulls wanna try for the sky, layers of resistance remain overhead. Yesterday's S&P jig filled the gap from August 1st and now faces Jefferson size resistance above. If the Minx is gonna bust through the goal line D and establish a durable advance, she'll have to turn up the volume.
It's entirely all right to respect the action but you never want to defer to it. If you did that, you'd love 'em higher and hate 'em lower and that's a recipe for whipped cream. The caveat in reacting to economic data (or any other discernable catalyst) is that the Minx often looks forward. In other words, if the next leg is gonna be Linda quality, the forecast must call for clear skies.
Can it happen? Sure, it can. The gorillas began to stir yesterday when the 50-days were touched and they're outsized players in an illiquid tape. If a coordinated agenda evolves, the skittish sellers may move to the sideline. Before you get blindly excited, however, please remember that overt negatives remain. This last try higher has occurred on extremely light volume, sentiment is giddy up, vols are cheaper than Mark Ratner and insiders are dumping stock left and right.
And you thought Spicoli was confused?
If you're unsure, trade a bit less (in between) and understand that market validity is a function of price. If they take 'em higher, it'll be because the economy is "clearly improving" and if they fail, they'll assign the above reasoning. I'm not waffling--I think this will end nastola--but I'm respectful of the beast and will adapt to the thin trading environment. As it stands, I want to fade (read: sell) rallies but if we garner jig over the G-Spot (S&P 1000), I'll take a fresh look on my shorter-term risk (while gingerly adding to my longer-term puts).
Watch those bonds and keep that right hand up. We'll get there...one step at a time.
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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