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Freaky Friday Potpourri: Twisted Logic!


Nasdaq 2000 is the important level of the day.


Since I slapped on that rather meaty trade yesterday afternoon-when it was Make or Break for Technology Stocks-I've been eating pretzel nuggets at an astonishing rate. As I'm somewhat superstitious, I've refilled the till and have continued to chew these salty treats as the tape scrapes towards the weekend.

I figure one of two things will happen. Either I'll get stopped out of my short-side bet in short order-I'm using NASDAQ 2000, drawn with a crayon rather than a pencil, as my defined risk-or my fate will be sealed as a modern day Augustus Gloop.

Stay tuned, and someone please get me a drink!

Here's what I'm thinking about when I'm not exploring my molars with my tongue:

  • On top of this chart-which makes NASDAQ 2000 the most important tech level of the year-it's worth noting that yesterday's high in the NDX was a 50% retracement of the entire decline from the 2007 top. Further, S&P 1000 represents a 50% rally off the March low (and where we peaked during the election euphoria).

    Click to enlarge

  • Among my downside lottery tickets are Research in Motion (RIMM) out-month $60-line puts. Why? Dandruff on top of a gap, which is sorta like break dancing in a room full of banana peels. I entered this trade a few weeks ago from lower levels (read: I'm underwater) but I point it out for those who might care (as a hedge or speculative bet).

  • My biggest fear with the NASDAQ 2000 level? It almost seems too easy, particularly given the tone of late and tenor of our tells. That's why God-or some trader, somewhere, at some point-created stops to remove emotion.

  • Minyan Eric notes, "There is so much going on with Citigroup (C), between the preferred swap, the short interest, the negative 100% rebate, etc., the arb community is pushing this puppy around. Through my lens, I wouldn't factor it into a macro or tape thesis." Fair nuff, E, and appreciate the insight.

  • Pull ovah, PULL ovah!

  • We noted the semicaps (Novellus (NVLS), KLA-Tencor (KLAC), Applied Materials (AMAT)) as Red Beans in the Green Sea yesterday morning.

  • Why do we point these out on a consistent basis? Stocks that don't rally in an "up" tape portend supply just as stocks that don't retreat on down days signal underlying demand. As we're apt to say, you can learn a lot just by watching.

  • Markets will do what markets do and the rest of us are just pawns in the game. Anyone who thinks he (or she) is bigger than the market either 1) has a God Complex, 2) needs to visit Jenny Craig or 3) will soon learn that if you're not humble, the tape will do it for you.

  • Be the ball, be very good at what you do but better at who you are, be true to your name and word. In other words, be a Minyan (and sport it proud!).

History Doesn't Always Repeat But It Sometimes Rhymes

Minyan PW brought to our attention that the 1929-1930 equity rally (coming out of The Great Depression) lasted 147 days and was up 46%.

Since of the 'generational low' in early March, it has been 145 days, and the advance is the same 46%.

After the 1930 rally of 46%, the U.S. stock market experienced a drop of 85%.


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Answers I Really Wanna Know:

It's been a very long day, this week, so take a deep breath, focus and let's end this week with some jingle in our jeans and a smile on our puss. In less than seven short hours, our requisite respite will arrive and the important stuff will be front and center. Think positive, as profitability begins within.

And remember, let's be careful out there!


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Positions in RIMM, S&P, NDX
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