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The Band Stand

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What's clear is that the matches are in the hands of many. What remains to be seen is when someone strikes the match.

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Playing, playing in the band
Daybreak, daybreak on the land


(Grateful Dead)



Good morning and welcome back to the flickering pack. We power up the Thursday pup with one eye on earnings and the other on the macro landscape. At stake are the keys to the summer vault as we toggle between the two sides of the S&P band camp.


Click to enlarge


By now you know the cause for upside pause. S&P and Moody's finally fessed that something is structurally amiss and Sallie Mae (SLM) furthered concerns that debt-induced deals are vulnerable to shifting structures and higher rates.

The underlying elements for an unwind have been in place, mind you, they've simply lacked a catalyst. And it's difficult to ascertain whether Bear Stearns (BSC), CDO's or mark-to-market will serve as the spark in the dark.

What's clear is that the matches are in the hands of many. What remains to be seen is when someone strikes the match.

We've spoken about this dynamic at length in Minyanville. In the context of a finance-based economy, the market machination is dependent of cheap capital and the velocity of money. With total debt more than 350% of GDP, the cumulative effects of a pebble have profound implications for the pond.

Naturally, as the Sallie Mae news hit the tape, equities found a bid and furthered the path of maximum frustration. It's tricky in the least and frustrating at best but the onus is on us to manage risk, a novel concept in a societal structural conditioned to chase reward.

Wal-Mart (WMT) reaffirmed its forecast this morning, which is being welcomed by investors in the early morning action. On the heels of Home Depot (HD) and Sears Holdings (SHLD), the price action will serve as a good sentiment proxy today.

Tertiary tells include Goldman (GS)and the financials (BKX 114 is a level to watch), market breadth (currently 3:1 positive), beta (Google (GOOG), Yahoo (YHOO)and eBay (EBAY) are curiously absent from the early lift) and the dollar (as it tickles decade lows).

Good luck today.

R.P.
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No positions in stocks mentioned.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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