For those that don’t watch this market tick by tick, it would be natural to think Monday’s session was a lazy summer day that saw lots of stocks unchanged, even though the major indices were all over the place.  Considering that and the sharpest decline in crude oil in a while, the 3% move pressured stocks out the gate.

All things considered, it’s somewhat impressive that major indices held up against the sharp drop in oil and hints of a rate hike. Interestingly, the Dow chart is now in a pennant formation (on a five-day basis), normally a harbinger of a major move in either direction.  The uncertainty of the market coupled with the fact that the last days of summer are waning, is resulting in an attention deficit that could lead to a determined move with little opposition.

Key Parameters:

• Resistance north of 18,600
• Support south of 18,475

Yesterday, the big news was the $14 billion acquisition of Medivation (MDVN) by Pfizer (PFE).  However, biotechnology stocks are still down for the year (IBB -12.7% year-to-date), and Big Pharma continues to have so many holes in their drug portfolios and thinner pipelines that more deals are certain.

By the way, the NASDAQ is up for eight straight weeks for only the 22^nd time in its 46-year history.  The index is only up 4.7% this year, putting it behind the S&P 500 and the Dow Jones.  With biotechnology and high technology catching bids, this index could really pick up a head of steam.  Right now, it’s riding the wave of a classic breakout.

Additionally, the new-home data set the tone as the housing recovery has been one of the more positive highlights of the economy.

Today’s Session

The market is going to open higher this morning, and a lot of credit has to go to a stock that most people have written off as dead in the water.   Best Buy blew away consensus, and in the process, underscored what it takes to become a great company.  While I won’t go that far, yet, there is a reason I have a lot of confidence in folks buying and holding 100 year old companies in retirement portfolios.  They have been through the ringer several times.

Best Buy is going through the ringer right now, but its adapting.

The key this quarter was to embrace the age-old wisdom of if you can’t beat them, join them.   The internet has been crushing Best Buy, but last quarter, it saved the company.  Online sales surged 23.7% to $835 million on higher traffic, higher order values and higher conversation ratios, and in the process, it took this segment to 10.6% of total domestic revenue up from 8.6%.

The battle is long from over, but it is joined and will be interesting to watch.  Meanwhile, this morning’s results have triggered a classic short squeeze as 14% of the float was short.