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The Most Important Levels of the Year Converge


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


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.

Twitter: @todd_harrison

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