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Random Thoughts: Markets Posture Into Earnings Season

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Fundamentals loom large on the horizon.

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MINYANVILLE ORIGINAL

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

It's been one of those days when I can't seem to catch up to myself; meetings, conference calls, contract negotiations, management decisions, board responsibilities, charity planning -- and that's just the last five minutes!

I am calling a personal time-out so I can turn my attention to the tape and share my fare for those who care.

In no particular order:
  • I'm intrigued by Michael Comeau's Facebook (NASDAQ:FB) vibe -- that Sheryl Sandberg would have highlighted mobile if mobile was moving in the right direction -- but I'm not betting against the company down here. I sold my stock at $22-half on Monday (vs. cost basis of $20) and I'm conscious that $19 is the 50% retracement of the corporate "life-cycle" price. In short, I'm a buyer on dips but I'm not sure I wanna be there for earnings.
  • On the heels of the "Romney Pop" this morning, I would offer that smaller government could -- and indeed should -- ground Helicopter Ben, whose term ends January 14 (Mitt is on record saying that he would get rid of Bernanke). In other words, be careful what you wish as it pertains to a business-friendly environment given the structural implications.
  • This environment is begging folks to overtrade, which often leads to "death by 1,000 paper cuts." Don't fall into that trap; there are 1,000,000 traders standing in a circle shooting at each other. Sometimes it's best to let the dust settle before pulling your six-shooter.
  • The technical setups recently flagged remain in flux (no signals yet) and the price action feels like posturing in front of the earnings avalanche. As I said earlier in the week, enjoy the quiet because it's not gonna last long.
  • What technical setups? Glad you asked. The first is the S&P (INDEXSP:.INX) trend channel remains in place, per the chart below.
  • Ditto the potential Head & Shoulders in the NDX (INDEXNASDAQ:NDX) which "triggers" below NDX 2770 (that would "work" 100 handles lower) and will invalidate above NDX 2830. This is the fatal flaw of technical analysis; the setup is "better" with higher prices and "worse" with lower prices.
  • The final chart is the S&P vs. the CRB (commodities). Note the correlation, as well as the recent divergence. If history is a guide, either commodities need to ketchup (higher) or the S&P will come for sale (or both).
  • The high-beta realm -- Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), LinkedIn (NYSE:LNKD) -- are holding their bid today. These fliers are usually the performance-anxiety vehicles for those chasing the year-end carrot, so keep that in the back of your mind if you're in this space.
  • I sold half my Research In Motion (NASDAQ:RIMM) on Wednesday, which leaves the remaining half with a stop below $7.65 (my entry). Stick and move, punch and duck.
  • I'm told by a high-level source that many of the trainees in analyst programs at top-tier firms are working their butts off....on building business plans that have nothing to do with finance!
  • If true, this is consistent with two articles from the MV archive: State of the Art (written in 2006 about the inevitable changes at financial service firms), and The Millennials Cometh! (shared earlier this year after the YPO Silicon Valley trip).
  • Festivus 2012 is Friday December 7. To see pictures of previous events, click here. To register for this year's soiree, click here. To inquire about having your firm sponsor the event -- you're a reflection of the company you keep as we do our part to help the kids -- please contact me directly. Every little bit helps!
  • I am heading to DC tomorrow for an IN-N-OUT YPO conference. I expect to be back by 3:00 p.m. but by the time I get to a turret, the tape will have likely closed. Just giving you the heads up as communication is the key to any successful relationship (or that's what my shrink used to tell me before I stopped talking to her).
  • Thanks a bunch, and I'll see YOU over on the Buzz! (Click here for a free two-week trial!)
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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Position in RIMM

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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