Who you callin' a monkey?!?
Once upon a time there was an engineer.
Drove a locomotive both far and near.
Accompanied by a monkey that would sit on a stool
Watching everything the engineer would do
Good morning and welcome back to the tip-toe shack. With yesterday's action thin as a reed, it's time for this rhyme to pick up some speed. We've waited in vain in this Minxy domain and didn't complain with the ticks so mundane. Now Elmer's on tap (with minutes so smug) as Hoofy and Boo both tug at the rug. Will the stagflation nation digest his new spiel or will Matador City soon let out a squeal? It's turnaround Tuesday, sit back and relax as we digest the news and uncover the facts!
A perfect storm has arrived in Minyanville as earnings, Elmer and expiration collide over the city of critters. The fundies, widely believed to be the saving grace of the bovine race, are starting to pick up in pace. While everyone knows that business conditions are decelerating, hope springs eternal as we listen for forward guidance. The poster child for the i-conomy (Apple (AAPL)) will paint the tape tomorrow before traditional powerhouses Citigroup (C) and General Electric (GE) bring some bling to life on Friday.
The monkey in the middle will play an afternoon organ grinder and that'll set the tone for today's tape. It seems absurd that so many are focused on a few choice words but the absence of excitement has a way of honing popular perception. Last month's minutes seemed to validate the existence of inflation and the hawks are now circling overhead. I doubt we'll get anything "new" although once-just once-I'd love to hear some tough love. "We've got inflation in input prices, deflation in labor markets and our efforts to reflate the economy have been futile." It won't solve our dilemma but some forthright dialogue would be very refreshing.
The last of the Easy E's is this week's expiration which should manifest in the sessions ahead. While some folks lay claim to gaming these monthly premium funerals, I've always believed that it's virtually impossible to discern an edge with the field as crowded as it is. My belief is that 1) index volatility has the potential to exacerbate during the week of expiration and 2) individual options are drawn to strikes with outsized open interest (relative to average daily volume). Please note that S&P 1200 and 1205 have some meat to their lines and IF we migrate higher, a paper chase could ensue.
Be that as it may-and it may be nothing-I enter today's tape with two legs in my metaphorical bear costume (50% conviction on the short-side). I slapped the fur on during Thursday's lift above S&P 1190 as a function of looming resistance (S&P 1200), lethargic action, defined risk and non-confirmations. I've sat tight as breadth and leadership have left a lot to be desired but I'm conscious of the itchy trigger fingers around the Street. If we get some further slippage, I'll likely look to roll down my risk-profile and lock in a few shekels.
We power up this morning pup to find Europe and Asia pretty in pink while the stateside futures sit on the brink. The Trade "Balance" was released this morning (-$61B vs. exp. -$59B) and the dollar has knee jerked higher in response. Perhaps folks were bracing for a deeper ditch although it's too early to tell if the grubby greenback will hold the mold. As it stands, the metals are hanging tough as Gold tries to push through current resistance ($430).
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.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter