Freaky Friday Potpourri: Wall Street Revisited
The moment of truth awaits.
"Life comes down to a few moments. This is one of them." - Bud Fox
They say you never get a second chance to make a first impression. The bulls, with their steadfast strength, charm and intellect, have enjoyed multiple opportunities to break on through to the other side of this critical market juncture.
Since the beginning of June, they've probed the top-end meaningful S&P resistance on six separate occasions. Each attempt absorbed an incremental layer of supply and increased the likelihood that the "buy stops" nestled on the other side of the ride would be triggered.
Yesterday, with breadth 2:1 positive, banks challenging the top end of the aforementioned pennant, steady underlying demand and the uncanny ability to shrug off bad news (Pandemic? Pishaw!), it felt like Hoofy would finally sprout acne above the most important level of the year and host a rather snazzy summer soirée.
As he popped the champagne and invited his fat and happy friends, a funny thing happened on the way to the party. The end-of-day buy programs-those curious, incessant, violent surges of demand that have littered the last few weeks-never materialized and we found ourselves right back in the longstanding range of S&P 920-950.
I've laid it out there with regard to my perception of the near-term nuances and my sense for the remainder of the year. As discussed yesterday,
While sticking with the bigger picture "W" bent, a last gasp higher into quarter-end remains in play (for some reason, my sense is that would end three days before the quarter). Where you stand is a function of where you sit-along with your time horizon and risk profile-so see all sides and allow an ample margin for error.
Inherent in that is the simple-maybe too simple-notion that until otherwise breached, S&P 950 is triple resistance and the level of lore. Jack Skiba once taught me "Don't anticipate the anticipator" (don't front-run technical patterns) and they were wise words then and now.
How am I operating? With a scalpel rather than a sword. I've been active intraday while keeping a tight leash on my overnight exposure. I haven't always employed this approach-Old School Minyans will tell you I've been "all in" with the bulls and bears through the years-but we must trade the hand that's been dealt and adapt our style in kind.
Good luck Minyans-let's end this week with some jingle in our jeans and a smile on our puss.
The standout action this morning? Yep, the greenback, which is a full percent higher against a basket of currencies. Remember, the dollar and asset classes can both decline but, in my view, they won't both rally.
"The story about Sovereigns seeking to sell a portion of their treasuries in favor of purchasing IMF bonds is the equivalent of disbanding your army in favor of the protection of the United Nations. Good luck." --Mike O'Rourke of BTIG
Does this chart of the S&P offer necessary perspective for Boo?
If you were a fund manager and had to scribe a quarter-end letter in 13 days, how would you approach this juncture?
Has the "fear of missing" been the destructive emotion in the marketplace the last few years?
Given the inevitable fallout that would occur if policymakers found The Fed and Treasury "in the wrong" yesterday, were you really that surprised that they roasted Ken Lewis of Bank America as they did?
Don't you think THEY know how important this technical level is?
I've got an early afternoon Amtrak to Baltimore to play Super-Uncle to Maia and Bradley and enjoy some chill time in the burbs. As such, lemme take this opportunity to wish all ye faithful luck in the muck and, more importantly, a most excellent weekend. You've surely earned it!
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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