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The Most Important Levels of the Year Converge

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It's do-or-die for the year-end try.

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MINYANVILLE ORIGINAL

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

Late yesterday on our real-time Buzz & Banter, we shared:

"The price action leaves a lot to be desired, quite honestly; while stocks hang in there, the tenor is lethargic at best as some important levels come into play. Again, S&P (INDEXSP:.INX) 1375 and NDX (INDEX:NASDAQ) 2650 (the respective 200-day moving averages) are on a LOT of radars and the reaction "in and around here" will shape the tape, quite possibly into year-end.

"While I missed the move yesterday (Tuesday) -- a 30 NDX-handles Snapper anyway -- I'm not so quick to dip my shtick the second time around. Why? A boiling toad comes to mind; the first bounce was intuitive given how quickly we got there (the 200-day). Now, we're meandering toward these levels of lore; conviction levels around the Street appear reactive at best. Talk about performance anxiety -- yikes!

"While we are supposed to get more constructive at lower levels -- and I am, on the margin -- we would be wise to respect the technical damage that has taken place (trend channel break, lower highs) as we map our forward path. I do foresee "N's over S's" (NDX outperformance of S&P) based on the charts below, but I would define risk on any upside tries and treat them for what they are: pure trades."
Those dynamics remain in play as we chew through the Thursday dew; Europe is better bid, as are commodities (despite a flat greenback) and stocks started the session with a green hue. There are some red beans in the green sea -- Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB), F5 (NASDAQ:FFIV) -- but today's tape is the bulls' to lose so long as the aforementioned levels hold. Keep it in perspective, however, for a bounce in the tech sector will likely trade to the top of the channel (newfound resistance).

Random Thoughts:
  • On Tuesday I shared, "Facebook continues to hold the all-important $19 level BUT earnings tonight will move the stock $5 in either direction, in my view." The stock traded $5 higher yesterday (although I did not participate).
  • What's the difference between the Federal Reserve and the European Central Bank? The folks across the pond aren't afraid to utter the dreaded "D" word. Remember, Deflation in a fractional reserve banking system means that policymakers have, for all intents and purposes, lost the battle of evermore.
  • Aside from some "put-away" long-term lottery tickets in the cannabis space (this may be my most fertile investment thesis for the next decade), I'm patiently waiting for a perceived edge. It's not easy but it's a necessary discipline if you're in hit-it-to-quit-it mode, as I am.
  • Remember, with year-end dangling in the distance, the buyers are higher and the sellers are lower. That's the way performance anxiety works; and if you can remove emotion from the mix and let the tape come to you, using prices to your advantage, you're one step ahead of the game.
R.P.

Twitter: @todd_harrison

Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
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No positions in stocks mentioned.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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