Todd Harrison: Sector Rotation Dominates the Market After February Payrolls
The biotechs, banks, and transports will tell the tale today.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.
The new phonebooks are here, and the February payroll is out. Let's dive right in.
The number was better than expected -- which is a good step for the economy but a bad sign for the taper. For a long time, bad was good (bad data equaled more tapering), so we must consider the other side of that sword.
I'm watching the biotech sector as one of my primary trading tells; IBB (NASDAQ:IBB) 260, as discussed yesterday on the Buzz & Banter (subscription required) and again this morning, should provide clues to the short-term tech fuse.
Looking the other way, the banks and transports will help the bulls if they can push through BKX (INDEXSP:.BKX) 71.50 and TRAN (INDEXDJX:DJT) 7600, respectively. A move through those levels will help qualify (confirm) the breakout in the S&P (INDEXSP:.INX), if and when.
As I write this, the biotech complex just took a hard turn lower as the banks and trannies are trying to lift higher. The bulls will argue, "Rotation, rotation, rotation!" but they can only say that if they do so in their best Mel Brooks voice.
It's a recipe for "S's over N's," or S&P outperformance of NDX (INDEXNASDAQ:NDX), at least for the session.
Why all the concern about deflation? To channel an oldie but goodie, "Deflation in a fractional reserve banking system means that central banks have, for all intents and purposes, lost control of the economy."
- Our overseas banking proxies -- Deutsche Bank (NYSE:DB) and Barclays (NYSE:BCS) -- both opened red in an otherwise green sea, which is typically a sign of supply waiting in the wings. Watch these stocks; they're screaming to be watched.
Minyanville's Alex Brokaw wrote a solid Bitcoin article that's worth a look.
Did anyone else have the thought, "What did the world's most shared selfie mean through the lens of socionomics?" Hey, me too!
We've positioned MV PRO as the HBO to basic cable, given the digital waterfall of information in the marketplace. It's an entirely better user experience with a robust data set of tools, and we're interested in your thoughts.
The VXO (INDEXCBOE:VXO) (fear index) should remain on your radar for reasons we've discussed.
- The S&P chart is an extremely attractive chart (Hi, I'm Todd), but it's just that -- a chart nestled within a multi-linear dynamic. It "works" to S&P 1960, but we should respect, not blindly subscribe, to any one metric.
- The Bear Scare? My friend Doug Kass highlighted the chart below, asking if the last short seller would please turn out the lights.
The last time I used "The Bear Scare" as a title was in March 2008, when I was in the Bear Stearns Board Room and asked the head of credit why the long bond was up two full points. "There's a rumor of problems at Bear Stearns," he said. The next day, the stock -- and company -- crashed. We've come a long way baby.
I wrote, "The most successful people I know are also the most grateful people I know" on Twitter last night, and a few folks said, "They're grateful because they can pay their bills." The funny thing is, I never said success was wealth.
- Have a great weekend; you've certainly earned it.
Follow Todd and over 30 professional traders as they share their ideas in real-time with a FREE 14 day trial to Buzz & Banter.
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 email@example.com.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter