The mittens are off!
Good morning and welcome to the last licks. As the snow falls fresh on Minyanville, Boo hopes to shake his year long chill. "I've been so cold I've frozen fur," he said with a collective brrr! "but there is still a month to go and I want to put on a show!" The bulls don't seem to think it's so as they count all their new found dough. "He had his chance to put me down," said Hoofy in his thorny crown, "but there is just one clown in town and it's that brown bear with a frown." Whew!--with eleven down and one to go, it's sure to be a trippy show!
Last week's holiday shortened affair ended with Hoofy (once again) knocking on heaven's door. As everyone stares at the current acne affair, eagle eyed traders (once again) have their fingers on the triggers. It's been that way through every technical inflection point this year--the hedgies all line up on either side of a level and let it fly. The resulting grind (since June), has rewarded Hoofy's heroes in a most anticlimactic fashion. He's certainly not complaining but the historically benign volatility has made for many a frustrated trader.
Will this time be more...exciting? It'll certainly be more emotional (performance anxiety) and that, in and of itself, may provide some added spice. What I'm more interested in is what happens when we inevitably break this uber-tight range. It "feels" as if the Minx wants to pop her cork in honor of the new year but after that it's anybody's game. Conventional wisdom seems to dictate that the recent back-to-back weekly losses (first since March) constitutes a correction and, as such, they've now piled back in. Call me old fashioned, but I would think that a legitimate correction would actually shake some of the blind believers from the bandwagon.
The only difference between higher and lower prices is perspective. When the Minx powers higher, it's obvious that the massive stimulus is spurring the economy and its underlying business conditions. If she falls out of bed, it'll be the mounting negatives finally weighing on the mindset of the masses. There are always two sides to every market and our current juncture is a prime example of this in both time and price. When the tide turns--and eventually, it will--those dark corner concerns will paint a most troubling landscape.
This is an arduous market to trade and we turn the page into December with many a tight grip on the handlebars. When we venture north of S&P 1062 again, pay particular attention to the internals and the financials. If they can lead by example, psychology could "get behind" this thing and push higher (in a last gasp effort to secure a few more percent). Still, I'm naturally wary of the infamous 'false breakout' as so many hedgies are now playing the same game. That, combined with the widespread belief that we've already corrected, loads up the left side of the boat. If a wave of concern muddies the water, there won't be enough life preservers to go around.
I opined last week that a "gap opening" through resistance might provide Boo with an optimal entry point and the Minx seems to be calling him out. As of this post, global markets are getting jiggy, the stateside futes are green with envy, crude is lower and the prospect of a trade war has downticked (although the greenback hasn't gotten any green back). The rubber is about to hit the road as we drive towards our year end destiny. Stay sharp, loosen that grip on the wheel and think positive, Minyans--it all starts within.
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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