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Random Thoughts: A Technical Indicator Issues a Warning!

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Sometimes you can learn a lot just by watching.

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MINYANVILLE ORIGINAL

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

Something happened the first night of my bachelor party in Iceland; I awoke Friday with a purple right ankle that was all sorts of painful. Following a few X-rays, the fine folks at the Reykjavik Emergency Room assured me it wasn't broken, but suffice to say I was scratched from snowmobiling across the glacier and hiking into volcanoes. And no, Mike Tyson wasn't anywhere to be found.

Some people would have been upset-this event had been 43 years in the making and we were just getting started-but I refused to let it dictate the rest of the trip. Instead, I was profoundly grateful that the ankle wasn't busted and I should be able to make it down the 'aisle' this Sunday. The longer you wait for dinner, the better it tastes-even if I'll have to hop to the chuppa!

Some random vibes in no particular order:
  • I nibbled on some Facebook (FB) under $19 yesterday, as I mentioned I would last week. There is no magic formula here; the Fibonacci retracement is $19 and we've been eying it for a while. And yes, I know there is a mountain of supply that came free from the lockup last Thursday. That's why I've set my stop below $17; discipline must always trump conviction.
  • There are a lot of folks whispering that stocks broke out to the upside as a function of the thin summer volumes. That may be true but we would be wise to note that summer volumes will continue for another two weeks. We should get a truer read on the world after Labor Day when "extended markets" square off against the percolating performance anxiety (into quarter- and year-end).
  • Past resistance is future support. The S's and N's did a lot of work at S&P 1400 and NDX 2725, respectively, so keep those in the back of your crowded keppes. In terms of the trend channels we've been following, note the charts below; as a function of the "N's over S's" (Nasdaq (^IXIC) outperformance of S&P (^GSPC)) environment, the NDX is attempting to base above newfound support (previous resistance) while the S's have some room before they tap the top-end at S&P 1425.

  • Eagle-eyed Minyanville reader Eric offers an updated look of the common stock (only) advance-decline line given the new weekly closing highs. As he notes, it's still below the spring highs and the recent July highs. He also included the same chart from 2007 in an effort to provide some context. Thanks E!
  • The VXO is trading back below Bar Mitzvah levels. Did it matter, does it now? Stephen would answer if he only knew how. Either way, I've pulled the chart of the VXO vs. SPX back to 1999 for some historical perspective.
  • Early morning eyes include a lower dollar, higher commodities, and mixed European bourses. Again, it's Thin Mints in the marketplace so if you're gonna risk your hard-earned coin, make sure you put limits on your orders and size yourself appropriately. One step in front of the other as we together find our way.
  • Good luck today.
R.P.

Twitter: @todd_harrison

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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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