Turnaround Tuesday: Earnings and Technical Levels Are About to Collide!
What to watch, and how to see it.
I've got two tickets to paradise; won't you pack your bags, we'll leave tonight.
Given that I was grilled last week for not mentioning Turnaround Tuesday-"How can you look yourself in the mirror!?!"-I wanted to make sure I led with it today. Not in a mean-spirited way, of course-that's not how we roll in the 'Ville-but as a gentle reminder that there are always two sides to every trade.
I was going to "Turnaround" my Ten Themes for 2013 with a list of opposite vibes for the new year, sorta like that Seinfeld episode, but about forward-looking financial prognostications. I started pulling up charts to map some potential upside targets and stumbled over a few interesting tidbits.
BKX 60 is the downtrend line from all-time highs.
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S&P 1575ish is a mountainous triple-top dating back to the late '90s.
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And NDX 2805 is the 50% Fibonacci retracement of the entire move from the tech bubble top and ill-fated burst (I remember that well!)
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While my 2013 themes were less about stock picks and more about the rapidly-changing world we live in-I wrote last night, "Twitter is to media what HFT is to trading"-I pondered pointing to an upside equity explosion as convention wisdom plays through (money floods from bonds to stocks) and central banks take over the world. Cue The Hollies, in reverse!
And then I thought to myself, "Self, people don't read the Buzz for entertainment-they have Hoofy and Boo for that!-they're looking for serious guidance from (clearing my throat) serious people.
So-being serious-we have competing technical influences as we enter yet another earnings season (my 22nd, if memory serves).
On the bullish hand, we've been talking about The Most Important Levels in the World for a month, the inverse Head & Shoulder patterns that "work" to S&P 1520 and NDX 2700, respectively, in a technical vacuum (and remember, with earnings on tap, fundamentals are going to vie for mainstream mind-share).
With a bearish paw, we could offer that tiered resistance in the NDX rests directly above NDX 2750, the "shoulder" of the previous dandruff included below, and NDX 2805, which is a 50% retracement of the entire tech bubble implosion. Through those lenses, that zone NDX 2750-2800 should provide staunch resistance, at least the first few tries.
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I don't sense that earnings will be all that impressive; the question becomes whether investors rationalize them, citing trepidation in front of the anti-climactic fiscal cliff. The "Don't Fight the Fed" and "All-of-a-sudden performance anxiety" to start 2013 (following a year of under-performance) could shape near-term psychology although, as you might have surmised, I believe The Devolution of Social Mood will trump greed by the time the dust settles (I don't profess to know when that will be).
So, how do you play this tape? With stair-step risk management, if that's your thing. We know S&P 1435 and NDX 2700 are near-term support (Technical Analysis 101 dictates the time to buy a breakout is on a retest of said breakout) and we talked targets and resistance above.
That same stylistic approach can be used on any stock with any time frame, so where you stand is most definitely a function of where you sit. And before you risk your hard-earned coin, I encourage you to read Jeff "As Good as it Gets" Saut's missive yesterday, as he is amongst the best in breed.
- Deutsche Bank (NYSE:DB) traded strong yesterday and it trades dry again today. This is of interest as it's the single biggest proxy for the health of the European Union (in my humble opinion). Check the chart below; those looking for long exposure can set their sell-stop below $46 for nice and tight defined risk.
- Check the chart below-the first circle is where Minyanville published The Gold Scold on September 8, 2011-this is not a victory lap, rather another example of the email indicator (we caught all sorts of heat for that one). The second circle is the 200-day moving average, which was recently broken like a bad habit (it tested it again today, and failed).
With family health, philanthropic endeavors, and business matters on both sides of the new year, I've been up-to-my-eyeballs in to-do's. As we start to put some distance between us and 2012, some normalcy will return to my active risk-management approach as shared in real-time each day on the Buzz & Banter (click here for a free two-week trial!)
- My days of performance anxiety passed long ago-and I have the war wounds to prove it!
That Triple-Lindy of the S&P chart above reminds me of The Decade of Decadence (written in 2009) that mapped the (at-the-time) bubble comparison chart, added below for your visual stimulation.
I'm the Zach Mayo of Minyanville; I've got no place left to go!
That's not really true; I've got a great wife and three beautiful children and there's not a day that passes that I don't kiss them all and tell them how blessed I am to have them in my life. I wasn't always able to say that and I don't take it for granted for a single moment. It should never take something bad to make you realize you've got it good.
- Good luck today.
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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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