So, so you think you can tell
Heaven from Hell, Blue skies from pain.
Can you tell a green field from a cold steel rail?
A smile from a veil? Do you think you can tell?
Another day is underway as the critters wade into the fray. With index options now in the rear view mirror, the focus shifts to individual equities (both from a price action and expiration standpoint). Now that the opening flurry (and morning earnings) are outa the way, let's dip a toe into the show and see what's what.
The most eye catching action has to be Juniper (JNPR:NASD). The stock is in the stratosphere this morning (sorry) and its ascent through triple digit valuations--and multi-billion market cap--is, well...reminiscent. If it walks like a duck and quacks like a duck, it very well may soon be time to duck. I'll take it one step further--the parabola that are these charts are shaping up as a textbook example of planet panic.
The offset, as offered by Hoofy, is that this phase can last a while. The banks, as measured by the BKX, have broken out to all-time highs (shocking), corporate spreads remain tight, the corrections are more like consolidations, liquidity is fluid and the news has seemingly validated the price action. Therein lies the crux of the upcoming trading dilemma: the most opportune time to get short (long) is when the news is the very best (worst).
Same ol' song--maybe--but let's think about this for a moment. Research in Motion (RIMM:NASD)--pure example and not involved/advice--has rallied from 45 to 85 in three weeks. Now, almost on cue, Merrill raises their price target to 110. Haven't we seen this script before? Nobody will question the process until the tide turns and the losses mount. Then, you can be sure, the fingers will point, the witch hunt will begin and the lawsuits will file. It doesn't matter now but let's earmark this comment for review at a later date.
For the time being, it's go along and get along for the bountiful bovine. S&P 1150 (and BKX 1000) remain beacons in the night and they're singing the sexy siren. A quick jaunt through the 'Ville finds breadth skewed to the positive, the brokers continuing their jig, biotechs sprouting acne and the dollar gettin' some greenback. We have seen some meaty macros selling SPY--a couple of beans, anyway--and that's something to keep an eye on.
This has been one heckuva party. And it's gonna be a helluva hangover.
I'll be back.
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.
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