It's another wet day in the city of critters but the overcast skies can't dim the mood--Mr. All-Class World Champion Buc's fan is in the house for his much awaited day in Minyanville! As he and Daisy get better acquainted (relax, cowgirl, he's married!), I wanted to take a quick stroll through the streets and see what's up.
The early morning futes are firm as traders have bid them up in a thin tape. There's no news, per se, but bonds are green and that's easing some rate fears. Additionally, the NASDAQ comp has now been down 5 days in a row and some (bored) salesman are running around with a stat that, on average, the sixth day gets jiggy (up over 2%) 90% of the time. I haven't confirmed this stat (Snoop is doing the back checks now) but that's what's floating around the trading wires.
Professor Reynolds chimed in to inform me that agency and swap spreads have tightened and that too, may boost moral. I'm also conscious that many of the rate sensitive names (financials and homies) have been waxed lately, and psychology 'could' bounce if fixed income continues to lift. I see the (bullish) stochastic "hooks" approaching (first time since March) BUT I'm also aware that meaty sell-offs generally occur from an oversold (not overbought) condition.
While the S&P has broken a triple bottom, chartists continue to key off S&P 965 as an actionable inflection point. For my part, I'm also watching XBD 550 closely as it was resistance...then support...now resistance once more. The broke and brokers should offer a good trading tell today, as should General Electric (GE:NYSE), the breadth, Microsoft (MSFT:NASD) and Cisco (CSCO:NASD). Also keep an eye on NDX 1240 as it's the upside line in the sand for the four letter freaks.
Finally, for the longer term investors out there, I'd urge you to look at the energy and metal sectors and become more acquainted with those spaces. A balanced portfolio is always a good thing and the sexy sirens of tech have been a pied piper of pain the last few years. Just because they've rallied doesn't mean they're fixed. Rather, it may offer a good opportunity to reposition your risk.
As I just said to Charlie (that's Mr. Buc's fan), I remain suspect (but respectful) of the market. I'm still of the view that higher prices should be sold (not bought) and will rethink that thesis (on a trading basis) if we breach the recent top in the S&P. As it stands, we've put in a series of lower highs, the internals have deteriorated (on the margin) and hope (sentiment) springs eternal. That doesn't mean they can't rally--but the road now has some potholes.
Fare ye 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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