If Latin America continues to trade firm, it could be a pyschological positive for the banks. (thanks elmo)
Good morning and welcome to the Minyanville Open. The minxy serve and volley continues today and the anxious crowd is on the edge of their seats . While this week's match has had a little something for everyone, Hoofy held serve yesterday and bulls seemingly have the advantage. Will our bodacious bovine slam the door on Boo's title hopes or can the bears claw their way back into the match? Quiet please--the critters are taking center court and the game is set to begin!
Whether you believe in technical analysis or not, there's no denying the animal magnetism of these levels. The semiconductors have been flirting with our (much discussed) right shoulder (SOX 330), the banks have been tickling nirvana (BKX 800) and the S&P has rallied right back to the trendline (from the Auggie highs). Whether or not they can punch through to the upside and, more importantly, stay there, has been the hot topic on trading desks lately.
This morning's much anticipated economic release should set the early tone and Beeks will take center stage at 8:30am. He'll begin by announcing the unemployment rate (exp.6%) and follow up with average hourly earnings (exp.3%), change in non-critter payrolls (exp.20k), change in non-manufacturing payrolls (exp. -35k) and finish up with average weekly hours (exp.34.2--hey, I should be so lucky!)
While emotions are high and traders will invariably pounce on the initial releases, we all know that we can't just close our eyes and buy (sell) 'em. If the numbers are good (bad), the first move will surely be higher (lower)--but after that, all bets are off. As Snoop Tone pointed out yesterday, there's legitimate reasons to be long and short right now and, regardless of your posture, you need to respect that.
As a "big picture bear," I have a natual predication to focus on the tape's "issues" and pick my spots on the short side. That, of course, doesn't mean I'm not actively scanning for long side opportunities--it just means that I tend to err to the side of Boo. That strategy has been the stream to the bull's salmon the last few years and, while this year may be different, the burden of proof is on Hoofy.
Despite the imminent orange crop report, the stochastic sell signals (S&P, DJIA, BKX) and widespread complacency (Investor's Intelligence, VIX, 10-day put/call) was enough to justify one leg in my bear costume (25% conviction on the short side). What I haven't resolved (in my mind's eye) is whether or not we have to "pop" before we "drop." In other words, with so many people watching these levels (particularly BKX 800), something's bound to give (see the end of Novemeber).
In any event, we'll know soon enough and, as always, we'll walk through it together. So you're aware, I'm leaving for Oakland early this afternoon but I hope to have mobile posting capability (up until 2:30ish). The lovely and talented Casey will not be joining me at the Hole as she's been asked to speak on Minyanville's behalf at the Consumer Electronics Show in Vegas. Hey Case--a little pressure on that hard eight, a'ight?
Good luck today.
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 firstname.lastname@example.org.
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