The Muck Juggler
What's going on in Latin America?
Good morning and welcome back to the snick 'n snack. After much ado at the critter Zoo, last week's tape neither flopped nor flew. "I thought we got 'em on the Cisco splatter," Boo mumbled while his pals all scattered, " but they assumed it didn't matter and ripped 'em on the payroll data!" Will the bulls get fat (and fat and fatter) despite the nonstop ursine chatter? Or can the bears take back the platter and cause the bovine hope to shatter? It's a brand new week in the Minyan clique so settle in and take a peek!
The reason assigned to Friday's upside rhyme was that the economic porridge was served at just the right temperature. If the report was too cool, pundits argue, concerns regarding economic fragility, political grist and overly optimistic assumptions would begin to root. If growth was too hot, a wary eye would be cast towards the specter of rising rates and the potential scarcity of easy money. Somewhere in the middle, however, would nourish the feeding frenzy that we've now grown accustomed to.
While actions speak louder than words (and also pay the bills), I would venture to say that the upside reaction was more a function of hunger and less a result of taste. The data WAS soft and, by all accounts, we're still massively below historical employment figures at this stage of the "recovery." A new productivity paradigm you say? Perhaps, I'll counter, but the market was oversold (in the short term), a whisper away from staunch support and benefited from some technical realignments (stochastics/VIX). In addition, the action in the corporate bond market--arguably the single best precursor to equities throughout the last few years--has yet to offer the green thumb.
That doesn't mean the giddy city will immediately evacuate but while we must always respect the price action, we cannot defer to it. With Friday's spry try, the NDX has now filled the gap created by Cisco's (CSCO:NASD) belch and is eyeballing NDX 1515 resistance. Further, S&P 1150-1160, the oft discussed 50% retracement of the entire bear swoon, also looms directly above (as does BKX 1000). Technical inflection points (zones) are often probed numerous times before rendering a final verdict. I'm not sure if it'll knock three times on the ceiling (if she wants Hoofs) but the broomsticks are clearly in hand.
On the catalyst front, the two biggies this week are Elmer's roast on Wednesday and Dell's (DELL:NASD) report after Thursday's close. While the action won't necessarily be limited to these events, they'll serve as harbingers of investor attention and a focus in trading circles. For what it's worth, and just in case anybody is keeping score, I think Hoofy stole last week's show as Boo went two for two in the primaries. He's clearly the dark horse--or bear, as the case may be, but the polls aren't closed yet.
We power up today's pup to find a softer dollar and firmer gold (on the heels of the G7), Europe roughly a percent higher, the stateside futures green with envy and traders more "comfy" than they were last week (not necessarily a good thing). Also, for whatever it's worth, Venezuela just devalued their currency and with the recent action down south, I wanted to make sure it was on your radar.
My tells remain much the same--breadth, financials, semis and levels--so let the initial noise filter through and then we'll take a fresh pulse. Lots going on this week, Minyans, so take a deep breath and remain lucid--the best is yet to come.
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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