New Regime

The market’s tone has changed and a new regime is starting to take control. There are many indicators and flashing lights going from green to yellow.

Techs are down six days in a row. Semis in particular look like a barrel of trash, and the lead times for semi orders eventually work their way into earnings guidance – so they are important. Also, there are semiconductors of all different types that go into everything, every facet of the economy. Go look at the SOX, it SUX.

Also, the dip buyers haven’t come in for Apple yet as they should have. The technically-inclined seem like they want to wait out that head-and-shoulders top possibility to be broken or invalidated.

Upgrades are being faded, too. Higher opens are also being faded, guys are talking about “the typical mid-morning sell-off,” without realizing what a classic sign that is of a tired tape that’s run out of firepower.

Have you seen the Russell? You needed small caps to join the rally and when they didn’t it was a major tell. Now they’re headed lower, the IWM is under its 50-day.

Fundamentally we’ll probably have the typical 60% beat rate this earnings season, but commentary about current and near-term conditions is not going to do us any favors.

With company management now openly fretting about the fiscal cliff and Europe/China, is this the moment where the macro abstractions finally make it into the data?

It seems that everyeone was thrilled to play the performance chase game until the stuff they were using to chase started to report quarterly earnings….then, not so fun.

Growing cautious is not the same as panicking.