Freaks and Fridays!
If the GM situation upticks, I could squeeze more bears than Thumper!
Let the games begin!
We power up this expiration pup to find the Minx clinging to some support (NDX 1480, SOX 417, DJIA 10,600) and churning under some resistance (S&P 1200, BKX 99). While technicals are simply one leg under the trading table, it's an appendage that both Hoofy and Boo would like to boast. Please pay particular attention to Intel (on the heels of Deutsche Bank's upgrade) as the semis cling to the 200-day and attempt to hold the shoulder of the reverse dandruff.
Speaking of appendages...
I hopped into work today with a leg of my own in my metaphorical bear costume (25% conviction on the short side). My game plan was to add the other leg back on an "expiration pull" to S&P 1200 but the 1190 strike proved a bit more powerful. My risk is defined (S&P 1206) and my strategy today will be largely dependent on the trading tenor and trusty tea leaves. The risk to the short side is a marked improvement in the credit markets after the scary Mary a few days back.
Whataya say, Earl Gray...
The obvious focus of late has been General Motors (GM)-not so much on the equity side (although, as one of the most widely held stocks, it'll sting into quarter-end) but because of the potential implications on the credit side. Minyans are well versed in this dynamic as a function of Brian Reynolds' excellent vibe and should keep this on their radars. Toss in the meltage in Aunt Fannie (FNM), salt in Sandy's wheel (C) and Hank's hammerin' (AIG) as areas of smoke and bovine choke.
Tell me about it, stud...
Oh Sandy! The Fed has placed a rare "gag order" on Citigroup and ordered them to refrain from making major acquisitions until they fix their compliance problems. Aside from being outright embarrassing (bad bank!), this comes as some dangerous dandruff flakes in the world's largest financial supermarket. Add that to the piggy wiggle below the 200-day (BKX 99) and you have the ingredients for a bitter pill and minxy spill.
While some unforeseen undercurrents will be alleviated with this morning's index expiration, the afternoon rebalancing and single name pin spin will remain in play through the day. According to CS First Boston, there will be several significant sell-side imbalances--$4.2 billion in Wal-Mart (WMT), $1.4 billion in Microsoft (MSFT), $700 million in Oracle (ORCL), $600 million in Carnival (CCL), $500 million in Coke (KO). According to my sources in the Street, much of this posturing has already been "gamed" by the fund community and may turn out to be a non-event.
Speaking of events...
Minyan Michael "Killer" Kowalski and Minyan Thomas Neuhaus sit atop the March Minyan Madness leader board this morning after sweeping all sixteen first round games. While the top prize is still wide open, this weekend will weed out the contenders from the pretenders. As for yours truly, my mood will swing with the fate of the Orange as they take on a tough Vermont squad tonight and eye a potential second round game with Michigan State.
All's fair in love, hoops and trading...
As discussed earlier, there's alotta "underneath" action today as expiration and a crowded rebalancing compete with credit spreads, chip upgrades, financial flakes and tired eyes. To add spice to the mix, the earnings avalanche will begin next week as quarter-end edges closer. The constant compression and yen for yield can manifest at any time (and either way) so keep your head on, your mind clear and your discipline tight. It's a long game, Minyans, and we all wanna stick around and find a winner.
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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