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Todd Harrison: The Stock Market Is Waiting to Exhale


The bulls and bears battle for technical control of the tape.

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

The Hump Day cometh as we fire up our systems to find more of the same: The world of Wall Street is waiting to exhale.

As the bulls knock, knock, knock on heaven's door -- also known as S&P (INDEXSP:.INX) 1850 in less colorful terms -- the ability to clear that hurdle will go a long way in providing the near-term direction for the next leg for the tape.

A few observations on this technical toggle:

1. Given the collective focus -- and everyone is watching this -- we must be careful of false signals, at least initially, as the market tends to pave a path of maximum frustration.

2. Conventional wisdom is that we're going to bust through to the upside and there are likely traders anticipating the breakout -- and holding exposure to sell into it.

3. Sideways action (under the right shoulder) would keep the pattern in tact and create symmetry as far as the chart pattern is concerned, as long as S&P 1820 (1800) holds.

4. Technical analysis is one metric, albeit a metric that traders defer to in the absence of clarity. In other words, if all is quiet on the fundamental front and the structural landscape is status quo, folks will follow the charts, which, in turn, will shape the final metric, psychology.

We should view this technical catalyst for what it is -- a guideline, not a given -- and listen to what it is telling us (a measured move toward S&P 1960) with a respectful grain of salt.

Random Thoughts:

  • Russell (INDEXRUSSELL:RUT) 1182ish (bullish breakout to all-time highs vs. potentially bearish double top) remains on our radar today.
  • The homebuilders open slack, again. HGX (INDEXNASDAQ:HGX) 210 is the 2013 high, for those who pay attention to such things.
  • The first half hour is typically noise; remember that when initiating positions other than quick fades.
  • The animal spirits are alive again -- both in the market (high beta) and my garage (a pesky raccoon).
  • The banks opened pretty in pink -- bending (as they have) is fine; breaking (if they do) will be a tell.
  • BKX (INDEXSP:.BKX) 71.50 is the technical equivalent to NDX (INDEXNASDAQ:NDX) 3640, S&P 1850 and RUT 1182.
  • Good traders know how to make money; great traders know how to take a loss.

Twitter: @todd_harrison

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No positions in stocks mentioned.
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