Watch the brokers and biotechs as a decent "tell" duopoly
Where are you going now my love?
Where will you be tomorrow?
Will you bring me happiness?
Will you bring me sorrow?
(Crosby, Stills, Nash & Young)
The morning dew continues to spew and the talk on the street is all about the programs. While we already discussed the tech pressure, please be aware that some S&P OTC puts are being "shopped" as well. What that means, in layman's terms, is that a trade (which allows the customer to hedge his book) is being shown to various Wall Street firms. After a firm "wins" the trade, they'll have to turn and sell S&P names (as their hedge). My contacts tell me that the notional value of the trade is one billion dollars, Dr. Evil, but the delta is a measly 10. In other words, it would create "only" $100,000,000 for sale.
Two schools of thought on this early supply. It's either indicative of a bigger sell side interest (negative) or the market is absorbing it with relative ease (positive). While our tells point marginally south, nothing particularly compelling is jumping out (again, it's early). Biotech and media are under pressure while energy issues (oil service and integrated) are following crude higher.
The gap band never tuned up this morning and that vacuum remains above the market. Some savvy technicians are using S&P 1030 as an inflection point (bullish above, bearish below) so we can put that on our trading radar. In macro land, the dollar is a bit weaker (nuttin' crazy), gold is a bit higher (skin of its teeth) and Fokker is doing his best Nuke Laloosh imitation (think garters).
In Minyanville news, we've got some monster announcements coming out so stay tuned. It's all good, baby, and I think ye faithful Minyans will embrace the forthcoming changes. It's not today's business, per say, but the tomorrow's of the world are looking ever so bright. That, my friends, is music to my ears.
As always, I hope this finds you well.
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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