Pick of the Litter
Beauty is in the eye of the holders.
"Trust, responsibility, taking the weight for your choices and feelings, and spending the rest of your life living up to them. And above all, not hurting the object of your love."
William Parrish, Meet Joe Black
Good morning and welcome back to the shivering shack. After four drawn out days of flickering stress, we've almost arrived at our requisite rest. "It's been a long week, that much is for sure," said Daisy the cow in a voice so demure, "the once giddy bulls are now insecure and they're looking around like a bunch that's unsure." Will Hoofy hang on to these levels forgone or can Boo bid adieu to the Matador brawn? One session remains before we get there, so suck down that joe as we gotta prepare!
We can't blame Hoofy for feeling a bit fragile. Crude is on a moon shot, we've violated multiple support levels and the next couple of weeks are the definition of uncertain. To add insult to injury, a fresh spate of corporate malfeasance seems to have surfaced as the insurers swallow their pride and investors eat some losses. Toss in concerns about a slowdown in China and the attendant meltdown in material prices and, well, it's a little spooky.
The equity price action could be a lot worse and the relative traction has sowed seeds of hope in some circles. The Matador crowd is holding their breath as they watch fear tick higher (VXO +30% in ten session) and the bears press lower. In their perfect world, electoral clarity emerges, crude spills lower and the tape fulfills the ramp fantasy into year end. They're also quick to point out that every downside head-fake during the last couple of years has filleted Chicken Little.
Is this time different? Has the big picture reality finally arrived? Are folks waking up to the fact that our economy, without the benefit of simulative steroids, isn't all that robust? The honest answer is that I don't know--I've long said that the inflection point will be psychological and, as such, it's tough to game when the collective mindset shifts. We used the camel analogy yesterday and it's quite apt--this tape can withstand a lot and travel far but eventually, the straw will prove to be too heavy of a load.
We power up this freaky Friday to find further concerns on China, more fallout in the financials and frazzled and fried traders. All three sisters have broken support (S&P 1120, NDX 1440 and DJIA 9975) and those levels are now resistance on any Snapper. On the downside, S&P 1100, NDX 1390 and DJIA 9800 are levels that the bulls will likely defend. The financials are a focus again (BKX 96.60) as yesterday's flies continue to buzz. Be on the lookout for sector rotation and define your risk when possible (both ways).
We're almost there, Minyans, so keep your wits about you and think positive. These aren't easy times and the onus is on us to remain lucid in our approach. In eight hours, we'll usher in a weekend full of baseball, friends and the fruits of our labor. Think positive and trade to win--it all starts with you.
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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