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Random Thoughts: Observations From the Front

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Earnings and technical levels collide!

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MINYANVILLE ORIGINAL

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

The following vibes are top of mind as we wade over our weekly Hump, in no particular order of course.
  • We spoke yesterday about two technical levels that "mattered" (for those who follow technical levels) in S&P (INDEXSP:.INX) 1450 and NDX (INDEXNASDAQ:NDX) 2770. I would note that Apple (NASDAQ:AAPL) is also testing an important level -- $650 -- which is the right shoulder of the head & shoulders pattern flagged a few weeks ago.
  • In other words, IF the bears are gonna make some noise, these are the levels they need to defend.
  • The financials -- which flipped a crimson switch late yesterday -- remain a key tell for the tape on the back of Bank of America (NYSE:BAC) earnings.
  • Goldman Sachs (NYSE:GS), which was the lead dog on the downside yesterday following its earnings report, also warrants a mention as the insider sales window typically opens a few days after each report.
  • If Facebook (NASDAQ:FB) wasn't reporting earnings next week, I would likely lean against the $19 level (again) for a long-side stab. As it is, and there is gap risk involved, I'm inclined to watch this rather than sweat the risk.
  • To our article yesterday, Why Citigroup Matters to You, ThinkEquity announced this morning that it is closing its stock trading business. CEO Greg Wright offers, "It's an incredibly tough business. Spreads are compressing, of course, but volumes have collapsed. There aren't enough commission dollars today for the number of market participants so there will be further consolidation." Yep, brutal.
  • At the request of the MV Editorial Team -- which is top-notch, in my view -- I will be hosting my third Twitterthon at 1:00 p.m. EDT. My handle is @Todd_Harrison, so you know, and I will be answering any and all questions as quickly as I can -- and as honestly as I can -- for 30 minutes straight.
  • The always astute Smita Sadana draws attention to the importance of the small-caps, as measured by the iShares Russell 2000 Index (NYSEARCA:IWM). We can add this to our list of important technical toggles; check the chart below, and thanks, Smita!
  • The risk to setting stops while trading options? Theta, or time decay, if the market slithers sideways. I don't foresee that "in here" given the confluence of levels and the avalanche of earnings, but we wanna see all sides when trading so it warrants a mention.
  • Market breadth on the Big Board has edged 2:1 positive, which qualifies the internals as a positive tell.
  • As it stands, I'm long a half position in Research In Motion (NASDAQ:RIMM) with a stop below $7-half, a handful of fresh SPY (NYSEARCA:SPY) puts (added late yesterday with a tight stop above 1460, per the chart below) and some lottery tickets in a speculative space that makes biotech a "blue chip" sector.
  • Thanks to the folks at the Financial Times Press, Amazon is offering free Kindle downloads of Peter Atwater's book Moods and Markets through Sunday. For those looking to understand why he focuses so much on social mood and how it impacts decision-making in the marketplace, you will find the book to be very helpful!
  • Festivus 2012 is seven weeks away -- yes, seriously! If you like live music, human capital, and helping children, this event has your name written all over it! Join us on December 7, 2012 and lock your spot for our holiday trot!
R.P.

Twitter: @todd_harrison

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Positions in RIMM, SPY
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