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Thursday, September 16, 2010

Market Thought... oh baby

Oracle and RIMM are whispering ever so seductively in our ear. Judging by the after-hours action, a lot of speculators/investors are getting turned on, and rightfully so, the numbers were impressive.

While this obviously translates well for market activity tomorrow, the SP500 (and many of the internals) are still at resistance levels. An interesting aspect of this market is that it is in a different trading dynamic than the summer. Looking at the SP 500 chart, as a stand alone, we are at obvious resistance levels.

But when the NASDAQ chart is correlated to the SP500, we see a different trading dynamic emerge.

The last two major resistance marks for both the Naz and SP500 were in mid June and early August. The NASDAQ clearly shows a breach from the 100SMA that was acting as resistance. Hence, we are entering a new trading dynamic.

Make no mistake, the 100SMA is still sloping downward. IMO, this means the recent run needs to consolidate a bit. It may just stay around the 200SMA or move toward 2250. This may translate to the SP500 to quickly retest 1100 or the 14SMA.

Basically, I am looking for a brief consolidation here, especially since it would be healthy after the run we just had. Then a new, more stable, bullish trading dynamic for the market. (I will not hesitate to act.)

Also, a side note:

When looking into Oracle's report, the one thing I kept thinking about was IBM. I kept thinking about how well ORCL was doing with its hardware, and could only imagine how that would translate to IBM. The reason being, IBM is the company ORCL wants to morph into, except IBM has been doing it for many more years. IBM released their major mainframe hardware refresh at the beginning of this quarter, and implemented their new financing that was designed to take more market share. This should translate beautifully to the bottom line this quarter. Also, in a recent interview IBM's CEO highlighted how HP is no longer a competitor and that ORCL will become one. Seeing how both IBM and ORCL leadership have publicly voiced their disdain for HP, I think HP will be the clear loser here. Two very smart and capable companies are going after a headless horseman. It is almost a death wish for HP.

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