The Hump Day Hustle
Hump? What Hump???
Run, run, run for the roses,
The bigger it opens, the sooner it closes
Meddle, meddle, friend of mine
All good things in all good time
Good morning and welcome back to the chuck and duck. It's time for the critters to hike up the hill and ready anew for a thrill in the 'Ville. Their work is cut out on both sides of the fence as we sit on the edge of our seats in suspense. "Can the bovine push through all these technical zones?" asked Boo to his crew while shaking his bones, "I'm betting they don't get through the Dow Jones with hair everywhere and looming unknowns."
While Boo tends to view the glass half-empty, he actually makes some good points as we power up this Hump Day pup. In fact, the looming and loud triple resistance (S&P 1180, NDX 1500, DJIA 10,400) is precisely why I slipped two legs into my metaphorical fur (50% conviction on the short side) late yesterday. Regardless of whether this effort pans out of the young bear, the (defined) risk/reward made it a worthy effort for the critter clan.
The way I see it, there are a few risks to this posture. First and foremost, the liquidity ability to reflate assets remains in play. If that happened, and as you know, my sense is that the dollar will reflect the dynamic via lower levels. This may be a bit myopic as a short-term tool which is exactly why I'm operating within the framework of a tight technical backdrop.
The other upside risk arrives as a function of the upcoming holiday weeks. With trading desks promising to be thin and angst levels already high, we need to appreciate the power of the collective agenda. It is no secret that hedge funds are having a tough year and they'll use the slightest advantage to capture precious performance points. The question remains, of course, which way this building pressure will ultimately release.
The overnight news did little to spur the herd as Applied Materials (AMAT) and Hewlett Packard (HPQ) pulled relative Debbie Downers. Hoofy isn't that bummed, however, as he knows that the ability to shake off bad news is a hallmark of a strong tape (and would embolden the bovine). These two issues should remain on our radars as tech tells, along with the usual suspects (breadth, financials, levels, macro, Meehan).
We've got a humdinga of an orange crop report coming up quick as Beeks releases the CPI at 8:30 EST. As we saw yesterday, economists are quick to explain away this number as "rear-view" (particularly in the face of a 9% haircut in the CRB). Still, as our goal is to fit the pieces into an ever-changing puzzle, please be on high alert for the report and, more importantly, the macro reaction that follows.
Thanks-and please enjoy your journey 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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