Random Thoughts: Heavy Lifting Coming Out of Labor Day

By Todd Harrison  SEP 03, 2013 10:16 AM

The bulls rally the tape, but resistance looms large.

 


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

In the blink of an eye, Labor Day is behind us and Wall Street is gearing up for the year-end bender.

August, as most of you know, was the worst month for stocks since May 2012. The fact that the Dow Jones Industrial Average (INDEXDJX:.DJI) was down 4.4%, the NDX (INDEXNASDAQ:NDX) was down less than 1%, and the S&P (INDEXSP:.INX) was only 3.1% lower speaks to the underlying strength of the historic buying stampede we've witnessed.

We walked out of the weekend to find green arrows around the world. The combination of a stronger PMI from China, the UK, and the eurozone, along with fresh doubt surrounding a strike on Syria (this issue will be debated on the Hill early next week) has given the bulls some newfound bravado; they understand folks lightened exposure into the holiday weekend, and they're looking to make them pay.

You know it won't come easy; given the technical damage in August -- broken trend-lines, lower highs -- the bears now have levels to lean against. The 50-day (at S&P 1660) will be the first test, and as long as that remains overhead, we could see renewed trepidation into next week's hearings. Readers in this space aren’t surprised by the current socioeconomic continuum, and the Russian saber-rattling adds gravity to the situation.

Of course, the onus is on us to see both sides. While I have plenty of concerns -- particularly if the system formerly known as capitalism is allowed to trade free -- I've been in this game for 23 years and understand that psychology drives price. 

If the bears can’t follow through to the downside, performance anxiety will uptick as we edge toward year-end. In the fakakta world of fund management, losing is OK as long as others lose more -- but winning isn’t enough if you underperform the benchmark.

Random Thoughts:


R.P.

Twitter: @todd_harrison

Position in SPY.

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.

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