Monday Morning Quarterback: Jungle Boogie!
Dangers lurk on the path to profitability.
They say the best time to take a break is when it feels like there's no way to escape in good conscious. Truer words have never been spoken.
The first five months of 2009 picked up where the wild ride of 2008 left off. It was stressful, consuming and vicious, not only during the freefall into the March abyss but throughout the bounce that converted more nonbelievers than the Spanish Inquisition.
Between trading, writing, Minyanville and The Ruby Peck Foundation for Children's Education, I'm blessed to do what I love with people I respect while serving the greater good. That's always been my definition of professional nirvana and not a day passes without my feeling a profound and mindful sense of gratitude.
That's not to say it's easy. As anyone with a pulse will tell you, times are tough and tension is elevated as we find our way to the other side of this grand financial experiment. Minyanville dutifully monitored the conditional elements of our current condition as they percolated and we'll continue to share our honest assessment as we assimilate the manifestation of those imbalances.
The onus is on each of us to find balance in our personal equation, which for me included a respite in the jungles of . Some folks might not think being surrounded by poisonous frogs, spiders, snakes, crabs, sloths, monkeys and rodents of unusual size qualifies as vacation but it was just what the doctor ordered, minus the painful ear infection that perforated my ear drum.
I return to my turret to find the tape-and my current view-similar to what it was before I left, with the "Make or Break" juncture of S&P 930-950 coming up quick.
There are two schools of thought in here.
The first is that the bullish bent I vociferously offered into March will continue to play out; reflation fueled by the lower dollar, validated by the recent action in commodities and aided by technical affirmation in the form of bullish reverse dandruff in the DJIA, S&P and Russell 2000.
The other side of the trade-one I would assign a 75% probability to-is that we're near The Widow's Peak of the "W" formation. In this scenario, the conventional wisdom that the worst is behind us will soon be dealt a vicious reminder that the greatest trick the devil ever pulled was convincing the world he didn't exist.
Remember Minyans, while the government effectively bought the cancer and sold the car crash, the simple yet sad fact is that our finance based global economy still has cancer. The other side of our Wishbone World (hyperinflation) only has a 25% probability, as it would require elasticity of debt from a consumer hamstrung by unemployment and home values.
And that, of course, would lead to further dollar debasement, which opens an entirely new can of worms for frustrated holders of dollar denominated assets.
All of this can manifest in many ways-a seismic currency readjustment, geopolitical strife, a crisis in confidence-and the script is being written in a dynamic fashion, which is why it's so very important to always see both sides.
And we will, each and every day in the 'Ville, step by step.
Some Random Thoughts:
Amazon (AMZN) is up a paltry fitty-cents in the pre-market with the futures up double digits (perhaps due to Google's (GOOG) announcement over the weekend that it's introducing a program that will allow publishers to sell digital versions of their newest books directly to consumers). With the stock up 50% this year-and, more telling, not participating in the early morning circle smirk-it's worth noting.
The commodity index, which has a rounding bottom that would make Beyonce blush, is down 46% from last summer as is edges towards it's 200-day moving average at CRB 258.
The last time the DJIA rose three months in a row was October 2007 when it registered its all time high.
As General Motors (GM) gets fitted for a toe tag, it's worth revisiting three risks that could permeate as unintended consequences, including the all-important counterparty risk.
There are few economists I respect more than David Rosenberg, the former chief North American economist at Merrill Lynch & Co. So when he vibes that we could indeed see the dreaded "W" manifest in the back half of the year, I take notice.
With so many variant opinions floating around the financial marketplace, it's easy (and perhaps a function of human nature) to be drawn to thoughts similar to your own. With that in mind, The Bradley Model predicted a large rally on February 8th-9th (a tad early, yet prescient nonetheless) that will last until June 3rd. A downdraft should then begin into June 26th followed by another lift (around July 14-15th) before a precipitous drop into September 14th-15th.
If that plays through-and, in the interest of full disclosure, I've never followed that approach nor do I particularly subscribe to "tea leaves" given the multitude of nonlinear variables-it could set the stage for the second 20% rally we vibed at the beginning of 2009 (completing a weird looking "W").
Are you ready for some action? The monthly jobs report, a few Treasury bond auctions and the deadline for the Fed's asset backed purchase program will litter our catalyst landscape this week.
See ya! On the plus side, Mercury Retrograde has officially ended.
Some serious snaps for the Syracuse Orange on capturing their second straight NCAA lacrosse crown.
In this world, a little levity goes a long way.
With that, I'm hopping over to the Buzz & Banter. See you there!
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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