Monday Morning Hop Scotch
Don't be a turkey!
- The year-end bender began to crystallize in my mind's eye on October 24th, when Big Ben was handed the baton and the collective psychology was given an adrenaline shot. And when tech broke through resistance, we openly wondered if the "easy trade" was a run to resistance at S&P 1250. Well tickle me Elmo, after a week that saw a further digestion of negatives and the embracing of positives, we power up this prickly pup sitting at the most important inflection point of the year.
- We've discussed both sides of this current ride and they remain in play as we gobble towards the holiday. While it doesn't take a rocket scientist to recognize that the path of least resistance has been higher, it is equally intuitive to expect some supply to give it a try into this technical tussle. I would be surprised-but not shocked-to see Hoofy continue his march without a gut check that tests his will and shakes the bovine tree a bit.
- Please be conscious that, with everyone and their hamster staring at the same level (S&P 1250), the lines of distinction--or, in this case, technicals--may become a bit fuzzy. As such, I will ask each Minyan to kindly remind themselves that technicals are but one of our four primary metrics and, given how overbought we are in the near-term, we'll need to respect the potential for a false breakout pop & drop. That, perhaps, is the most likely scenario that is starting to crystallize in my crowded keppe-a run through resistance (that triggers tossed towels in Red Dye) followed by a vacuum lower that catches everyone leaning the long way.
- Lest we forget, after an awesome autumn weekend, that we had an expiration on Friday. Be on the lookout for some hangover action as traders square their outstanding options risk in front of the (holiday thinned) trading week.
- Mini-Minyan Mailbag
"Toddo--I live far from New York City and really don't know what you mean by acrimony. Perhaps you could expand on your observations and comment why you believe these emotions are manifesting themselves. Thanks, Minyan Jim"
From the outside looking in, Wall Street seems to be hummin'. The brokers are trading at all-time highs, the mainstream media is reporting "record bonuses" and the year-end rally seems to be just what the doctor ordered. I will humbly offer that the underlying tensions are building-not dissipating-despite the gains we've seen from the post-bubble lows. It may not be obvious to an outsider looking in but I can assure you, from an insider looking around, that the angst and attitudes are palpable.
One of the toughest tasks we face in Minyanville is to debate and discuss sensitive topics without getting "personal." It's easier said than done as we all take great pride in our perspective and performance. When frustration mounts, as it has through these last few years, corners are cut and tempers tighten in a search for a scapegoat. Perhaps it's an inevitable function of the overcapacity in our industry. Maybe the confluence of technology and regulation (that have rendered certain services obsolete). But make no mistake, folks are flustered around the Street. Keep your cool and let's please stick together.
- General Motors, fresh off a snazzy Snapper last week, is painting the tape with positive remarks. I'm not involved in the name but I'll again vibe that these are Band-Aids on broken bones. I don't think General Motors-as we know it-will be around in a few years. The model is flawed. The pension is problematic. And they are, at the end of the day, a bank that is dependent on low rates.
- We've been actively monitoring the metals after the false breakdown (below Gold $460), the pennant formation (that "resolved" to the upside), the subsequent retest (XAU 107ish) and the following flier to eighteen year highs. The precious ones are trading higher this morning and while some pullback is inevitable and intuitive, my long-term vibes remain firmly in place.
- After a frustrating Friday, my Queen surprised me with a trip to the Castle on the Hudson. It was a welcome respite from the big city frazzle and a venue that I would highly recommend for Manhattan Minyans looking to get away.
- Speaking of getting away, I've gotta hop to the Buzz and ready the critters for another day in the fray. This week promises to get thin and thinner into and after the turkey trot so keep your head up, your risk tight and your energy positive. 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 email@example.com.
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