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Freaky Friday Potpourri: The Petty Thieves!

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It's make or break for the Wall Street shake.

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I was sitting in my digs yesterday with a snazzy new professor candidate when he asked what the market was doing. "It's a Tom Petty song," I said matter-of-factly, "Look at that cluster on the right side of that chart; the oversold condition created last week has been worked off as a function of time rather than price."

Now, financial markets are an ever-changing multi-linear dynamic and technical analysis is a context, not a catalyst. It's a tool to measure risk, which is why so many folks have been -- and remain -- squarely focused on S&P 1080.

Hoofy has pitched tent near this technical inflection point, which gets weaker with each subsequent retest. If he toes that line, his buddy Snapper could save the day; if they scatter, however, Hoover is lurking below (somebody call Delta Tau Chi!).

As we discussed last week, S&P 1080ish isn't just the bottom of the Q4 trading range, it's also the upward sloping trend channel that's been in place since the summer. CitiFX, highlighted the pattern this morning and offered that since last March, two consecutive higher sessions have been a consistent indicator that a trading low has been established.


Click to enlarge


Click to enlarge

On the fundamental front, overnight earnings, including but not limited to Amazon (AMZN) and Microsoft (MSFT) were well received, and fourth-quarter GDP expanded at the fastest pace in six years. Hands over eyes, that's good news; the risk, of course, is that "good news" has been sold the last few weeks, including Intel (INTC), Apple (AAPL), JP Morgan (JPM) and the reconfirmation of Ben Bernanke.

As I pound furiously at my keyboard, the pre-market S&P futures are up nine points and the NASDAQ futes are 20 handles higher. The reaction to news will tell the tale today, as well this reaction to levels (should the bulls get a grip, resistance will emerge at S&P 1105, 1120 and 1150, if and when). I'm also keeping an eye on the greenback, which has a nice and tight rounding bottom as a function of sovereign fears around the world. You know our take on "asset class deflation vs. dollar devaluation" so keep that in the back of your mind.

Earlier this week, as discussed in real-time on the Buzz & Banter, I rolled my March S&P puts to September as I continue to "trade around" a short bias (selling blips to buy dips). My plan on the downside, should S&P 1080 break, is to roll a slug of my defined risk to the other side of that level (past support is future resistance). Should Snapper (or Stella) get a grove back, I'll operate in the context of the aforementioned upside levels.

One step at a time as we navigate this wickedly wild financial reality show.

Random Thoughts
:

  • Minyan Vince notes "When I saw the headline "Papandreou Says Rumors Hurt Greece, Not Seeking Aid," the first thing that popped to mind was Alan Schwartz appearing on television and reassuring the public that Bear Stearns was well capitalized." Good point, young man.

  • That's not to say Mr. Schwartz lied; given our still-existent derivative web, the underlying movements in the marketplace were -- and are -- thisquick. That came back to bite Bear Stearns; the obvious question is whether the same will prove true for Greece.

  • The conspiracy theorist in me argued yesterday that they wouldn't let the market crater the day after The State of the Union. Sharing that thought once required that I operate from a grassy knoll wearing a tin foil hat; that is no longer the case.

  • Isn't it ironic that in the digital age of social networks and online communities, folks are inverting inwards as the economic evolution continues?

  • The taste is gonna move you.

  • Bloomberg reports that the French were willing to negotiate American International Group (AIG) contracts. Shocker there!

  • More on AIG from Hoofy and Boo. Why? A little levity goes a long way.

  • If social mood and risk appetites shape financial markets, what does the eye-popping acrimony portend for the tape?

  • Remember the Money Market Madness? As a follow-up, some new rules have been passed as it relates to our "safe" money.

  • Nouriel Roubini expressed serious concerns about the EU while speaking at Davos. Sound familiar?

  • Only a few short hours until our requisite respite. Make 'em count and let's end this five-session stretch with some jingle in our jeans and a smile on our puss.


R.P.

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