Rumors of my demise have been greatly exaggerated!
Well I married me a wife
She's been trouble all my life
Run me out in the cold rain and snow
Rain and snow, run me out in the cold rain and snow
The Monday affair is covered in hair as Hoofy digs deep for something to wear. Nosty starts to the week are becoming old hat in the city of critters as we all digest the deja Boo. And while today's fray isn't as fugly as last Tuesday's tussle, I've heard quite a few traders opine that this is par for the upside course. Remember, Minyans, past performance is no guarantee of future dip shticks so play 'em seven ways till Sunday but leave emotion on the hat rack. As we've learned (but may have forgotten), hope is not a viable investment vehicle.
The Matador Crowd is looking for moral victories and that'll begin with the closing levels. S&P 1200 and SOX 440 are both technical reflection points and Hoofy is making a valiant attempt to keep them underfoot. With crude so rude, breadth a mess and the piggies failing where they should (BKX 100), the bovine will assign "company specific" toe tag to Biogen (BIIB) and offer that the trannies and nets both trade dry. Lotsa balls in the air, I know, and I'm watching Wal-Mart (WMT) (under $52) and Citi (C) (most important stock) as clues nestled in the equity muck.
The story du jour, in my eyes, is the continued rippage in the CRB. The commodity proxy is now 9% higher than it was February 10th and that's freakin' some bulls out. The PPI/CPI disconnect suggests that corporate America will eat the meat of these input upticks and that doesn't bode well for margins (this may not be today's business but it's likely quelling sentiment in some circles). The positive spin, of course, is that a rising liquidity tide will boost all boats but that'll only matter if and after the equity market catches a bid.
What do I think? While I believe the imbalances will ultimately tip to the downside, I respect both sides of the probability spectrum. That is why I was tight with my stop levels on Friday and why I'm not being more assertive now. There are a ton of competing dynamics in play and my goal, in this forum, is to assimilate them effectively. If my eyes can lend a hand to your process, I will consider the day in Minyanville to be well spent.
As always, I hope this finds you well.
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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