Consolidating till blue in the face?

Despite a little excitement (Nazzy falling 50pts off the bell) due to CSCO’s guide , the market exhibited the same trends that fall into the ‘ digestion’ premise heading into the week with any dip viewed as buying oppy’.  In yesterday’s CSCO discussion, it was noted the ES reaction seemed ‘muted’ considering the guidance debacle and this played out as the broad market clearly ignored and even Tech’ decided it was a company specific malfunction and not a macro one. 

Interestingly for a market that rests every Q on Chambers words on future macro direction,  it hastily threw out/ignored his sightlines for today.  Despite, today’s quite impressive early comeback, (biggest decliners EOD on our Shadowlist were only ~2% (AKAM/NTAP), we’d delay judgement on this debate till next week when some Nasdaq momo’ darlings and others report their Oct ends.   You see the underlying part of this rally has been the earnings story with higher 2011 EPS projections coming out of it.  If more like CSCO appear those numbers will not come to fruition by the time we get Q4 reports out in January.

All in all, these fresh CSCO related question marks add to the moving pieces (Euro sovereign debt, China hot inflation number today, streaky upside from USD) creeping up as daily selling excuses with no fresh tailwinds to fight.  Despite the positives of what appears as a week of consolidation as proposed to start the week, the market still faces a strong fib line dating back to Oct 07 at ~1229 that in essence seems further away (to re-test) with each rinse and repeat of the shallow pullbacks. It may be fun (rinse and repeat) for fast traders, but investors holding on for more upside to close off the year may eventually become tired of this routine, at which point we get some real selling pressure.  A not so nice close one of these days would likely be a sign of this ball starting to roll.