May peace be with you!
The clock on the wall's moving slower
My heart it sinks to the ground
And the storm that I thought would blow over
Clouds the light of the love that I found
The afternoon cruise is singing the blues as we ready to light a new minxy fuse. With Beeks standing stage left (and Elmer schvitzing stage right), the all-important payroll data is set to step into the spotlight. We've discussed the litany of crosscurrents and understand the fragility of the current psychology. What we must now discern is what it all means and how it fits into this looming catalyst.
I've noted over the last few sessions how the (light volume) rally was begrudging and the flow we saw found it easier to "take" than to "move" size. That has manifested itself into today's crimson tide and produced some of the fuglier internal readings in recent memory. Some will argue that outsized lopsidedness is a precursor to a turn but I think that's reaching (and I know Mr. Roque agrees with me on this one). I follow the breadth as a coincident--not leading--indicator and it doesn't smell well or portend a green swell.
I've been having (another) internal debate regarding the metals after the Carrie unwind started to crystallize in my crowded keppe last week. If in fact the spigots are drying up--and that's extremely difficult to ascertain--the asset class morass won't differentiate between stocks, bonds or commodities. They went up in synch as a function of liquidity and will equally sink if there's no more fluidity. That element--the structural metric--is currently trumping technicals or fundamentals and will shape psychology as we trudge ahead.
So what do we want to see tomorrow? I would "think" that the bulls need to see Goldilocks type growth--not too hot (for fear of rates), not too cold (stagflation) but just right. That's a thin margin for error, granted, and while I think the stagflationary script is inevitable, the timing (of when the collective mindset will adopt that view) is the $24 gazillion dollar question. We've been force fed denial for a long time (just my opinion) but I've also learned to respect the collective agenda of a scared central bank. We're currently somewhere in-between the brainwashed perception and a very scary reality.
We've got room (to the March lows and below) and enough short-term fear for a fist full of Snapper. That sets the stage for a potentially binary catalyst tomorrow and I would urge you to remain lucid and make smart decisions into the closing bell. It takes a whole heckuva lotta effort to make money and a momentary lapse of judgment to lose it. Don't press or guess...err to the side of caution and await that elusive edge.
Fare ye well into the bell.
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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