Freaky Friday Potpourri
There are alotta competing cross-currents in the global financial machination and the goal is to view the big picture as a continual series of little pictures such that you define risk and allow discipline to trump conviction.
Currently, it appears that my slumping Sox and your Yankees are headed in opposite directions! Anyway, a month ago you correctly picked 1530-1550 as the next probable stop for the S&P. To be honest, when you penned it, I really didn't think it would get even close (silly me).
Anyway, on Wednesday you spotted S&P 1500 and, if broken, 1460. I'm really curious how you identified these levels? I'm really trying to "elevate my game" and appreciate any help you can toss my way.
Ground Control to Minyan Tom,
Often times, different lenses provide different angles of the market. Back on April 26, when all was well in the world, I pulled back the S&P chart and eyed the old highs. The closing high (1527ish) and the all-time intraday high (1550ish) seemed like an intuitive target range given the action.
Once we pushed through the first level, we spoke about the potential for a "vacuum gap," which we got. From there, traders reset their stops below support (previous resistance)-which also happened to be the uptrend line from March-and that break caught traders leaning long and begged a move to the previous level of contention (S&P 1500) and, beyond that, the prior breakout point (S&P 1460).
Now, technicals are great but, as we know, they're simply a context. I gained more confidence in Boo's view after assimilating the landscape (including the prospect of higher rates), watching the action in the banks (which have been a terrific leading indicator for the broader market) and monitoring market breadth (which has been horrid).
Bottom line, there is no magic formula and, in the interest of full disclosure, I didn't play the tape as aggressively as I would have liked. However, that was my stream of consciousness as I step back and recount it. There are alotta competing cross-currents in the global financial machination and the goal, at least for me, is to view the big picture as a continual series of little pictures such that I can define my risk and allow discipline to trump conviction.
Other Random Thoughts on this most Freaky Friday…
Old School Minyans know I'm always early but with regard to the evolution on Wall Street, I sorta wish I whiffed on that particular vibe. Unfortunately my sense continues to be that, as research functionality can't be justified by investment banking revenue, Prudential will prove to be one of many casualties in this ongoing war.
I'm unsure if asset allocators (out of stocks, into bonds) have been involved in this latest twist but if they were, fixed income would seemingly trade better. That's a caveat for Hoofy that may not have reared its head yet.
I scribed a vibe on Wednesday that spoke to the conditioned complacency of buying dips. Now that we've gotten a coupla straight down sessions, it'll be interesting to see how the first and second dip buyers react to the slippage. Particularly into the weekend.
The Minyan mission continues to grow as we build the 'Ville and stake our claim. Please know that our most robust content proposition is over on the Buzz so if you haven't soaked in that energy, give it a shot. It's real-time and it's real good.
One of the most respected technical services around commented on the "90% downside day" yesterday, which speaks of panic selling. The key to continued bovine longevity, from what I'm told, is if we see a "90% upside day" in the coming weeks. The unusual aspect of yesterday's readings is that this typically occurs after a prolonged downtrend rather than near fresh highs (thanks Minyan K).
Hopping over to the Buzz to continue our collective noodle. Good luck Minyans and let's end this week with some jingle in our jeans and a smile on our puss.
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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