Randoms: Road Signs
History doesn't always repeat but often rhymes, and it remains to be seen if Dr. Seuss has the juice to sell the earnings news.
A new week is upon us, one that will be flush with earnings galore. With Intel (INTC) and JP Morgan (JPM) in the rear-view mirror, Citigroup (C), IBM (IBM), Bank America (BAC), Mother Morgan (MS) and General Electric (GE) will offer up their latest state of the union.
As we ready for a fresh set of fundies, the technical construct is gaining mind share as a confluence of price points -- and the measure of time -- commingle. While this metric is just one of our four primary guides, it offers a helpful context with which to measure risk.
Perhaps the most obvious element is the downside gap created on the first trading day of the decade after the New Year champagne pop. These vacuums have a tendency to "fill" and should S&P 1127 breach, it "works" to S&P 1115.
Not to be forgotten, S&P 1120 is the top end of the Q4 trading range that served as resistance and, once broken, morphed into support. Combining these lenses and drawing lines with crayons rather than pencils, we arrive at S&P 1115-1120 as the first primary support zone.
Interestingly, the bottom of the aforementioned range -- S&P 1080 -- is the same support found in the upside trend channel that's been in play since the summer. As you might expect, overlapping levels lend to their strength, whether folks follow them because they work or they work because folks follow them.
Meanwhile, courtesy of the Department of Synergy, this past Friday January 14th 2010, was oddly noteworthy. Why? On January 14th, 2000 precisely ten years prior and 1000 points higher, the DJIA topped -- and reversed lower -- at a level that coincided with a Fibonacci retracement level.
History doesn't always repeat but often rhymes, and it remains to be seen if Dr. Seuss has the juice to sell the earnings news. This tidbit is interesting, however, as long as we remain conscious that bottoms are usually points and tops are typically processes.
Some Random Thoughts:
- The Massachusetts senate election could have profound near-term implications for the markets. A Democratic win would seemingly serve as status quo while a Republican victory could tip the scales enough to dent a litany of financial reforms, including the proposed bank tax. Should and if that happens, it would likely trigger a rally.
- Minyanville Editor-in-Chief Kevin "Pepe" Depew, a devout J-E-T-S fan, hasn't shaved since his team made the playoffs and won't shave until they lose. It's yet unclear if he means this season or their next loss, which could conceivably be a ways away.
- Mentos had a catchy jingle but this was better.
- Target (TGT), Hot Dog (HD), and Lowe's (LOW) quietly out-performed on Friday. Keep 'em on ye radar as we edge ahead.
- 2010: The Year of the Critter.
- Many have been hurt by the last ten years of financial performance and nobody wants to hear about the potential for another decade of painful readjustment. While credit markets are suggesting that pullbacks will prove temporary and the comeuppance is a few years away, we should remember that those who don't learn from history are destined to repeat it.
- Four hours of Jack Bauer was just what the doctor ordered. I have no shame in admitting my bromance; the world needs more people like JB.
- March will mark the two-year anniversary of the passing of Zoë, which left Phoebe without her partner in crime. This Friday, "Crash" Harrison will officially join the crazy clan.
- Good luck Minyans; let's make the most of this holiday-shortened stretch.
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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