Monday Morning Quarterback: The Bull-Bear Debate!
Market musings to kick off the five-session set.
I've written Monday Morning Quarterback for years that the process instinctively began anew this morning; a blinking black curser on an empty sheet of paper, eight big screens (nine if you count television), systems ablaze with scrolling headlines and a slew of newspapers sprinkled across my desk (the "news" component of our "where news meets opinion" approach).
As discussed last week in Full Disclosure, our editorial management team has adopted a more prescriptive methodology for Minyanville content. While "truth and trust" remain foundational mandates of all things Minyan, longer-form opinion columns will post on our flagship platform while the Buzz & Banter will continue to feature intra-day musings and actionable observations.
With the release of MVTV Random Thoughts-in addition to my weekly syndicated column and various Minyan endeavors-I'm striving to find some rhythm given this newfangled routine (time management has never been my strong suit).
I have no doubt we'll get there but I, for one, always feel better when mis ojos son los ojos with regard to total transparency in the 'Ville. In the meantime, and while I have you;
Market musings to kick off our five-session set:
Amazon (AMZN) is up 30% since Thursday's close, Baidu (BIDU) added twenty beans over that same span and Mr. Softee (MSFT) partied like it's 1999. Still, the four-letter freaks spent the better part of Friday dancing in Red Dye and as I pound this keyboard, remain below the intraday peaks in the NDX registered on Wednesday and Friday.
Are we witnessing bull market profit taking or is this more ominous through the lens of "reaction to news?" There are always two sides to every trade and I'm gonna quickly walk you through both.
The View from Matador City:
Hoofy, our resident bull, sees basing above previous support. He's quick to remind us that overbought conditions can be worked off as a function of time or price and the channel surfing between S&P 1080 and S&P 1100 is a textbook consolidation, quite likely before a potential an attack on S&P 1120, the level of lore into year-end.
That, coupled with the by-and-large better-than-expected corporate earnings, are what he and his reactive cronies are eyeing as conditional elements of year-end, performance anxiety driven circle smirk. "I'll see you at Festivus," he recently boasted to a buddy, "Drinks are on me and none of this old, vintage-I want the fresh stuff!"
A Try from Red Dye:
Across town, the singed fur you smell is last years reigning MVP, Boo. After a Hall of Fame performance that carried over into the first quarter of this year, he's making worse decisions than JaMarcus Russell (and that's pretty bad).
He takes solace in the fact that the masses are uniform in their upside opinion-with an equally unanimous bearish bent on the dollar-and understands secular bear markets are littered with false hope and empty promises. "Japan had four 50% rallies since 1990," he grunts, "and it's still down 70%!"
Additionally, the VXO was a teenager last week, the trannies (eww!) took it on the chin and Capmark Financial-one of the nation's largest commercial real estate lenders-was fit for a toe-tag over the weekend, reminding investors that walls of worry crumble both ways.
For What it's Worth
For my part-and understanding opportunities are made up easier than losses-I've got a handful of positions and have been operating 1) smaller 2) with a short-side skew (selling blips and buying dips) 3) an eye towards S&P 1100 (first resistance) and 1120 (real resistance) and 4) with steadfast humility.
I've never been one to run with the crowd and that sometimes serves as a headwind when trading an environment dominated by denial, migration, panic, fear and greed. It remains my view, however, that critical thinking-asking "why?" rather than just "what?"-will continue to serve us in good stead, at least with the benefit of perspective that only hindsight can provide.
Trade and think accordingly Minyans; and enjoy the journey.
- Keep your eyes peeled to Bank of America (BAC) $15.50ish, drawn with a crayon, as near-term support for this financial proxy. If "as goes the piggies, so goes the poke" still applies, we'll need to keep our eyes peeled to this level as we edge into next week.
- Other clues to the fuse? TRAN 3800, which is slightly below current levels given the Monday morning bounce.
- Two smallish positions added since we last talked-one late Friday and one this morning-a smallish Powershares DB (UUP) (dollar) bet and an oh-by-the-way Apple (AAPL) short (with a strict stop over last week's high tick). Sometimes right, sometimes wrong, always honest and never advice (I don't know you're time horizon and risk profile).
- If you haven't weighed in on TickerTalk, it's open and available to all Minyans on our home page. Please and thank you, as always.
- Does anyone else get the sense there are stuck shorts in Amazon?
- How much of the overall price action is unforeseen forced hedge fund liquidations?
- My aforementioned Goldman Sachs (GS) short was unwound into Friday's steady drip and this morning's quick dip. GS $175 (the 50-day) wouldn't shock me but as trades meant to be taken-I humbly rotated some risk. Baby steps...
- Speaking of which, as December paper is unwound, I'm looking to rotate exposure to out-months in the spring. Too many year-end agendas are in play for my particular taste.
There's a huge difference between proactively predicting "a prolonged period of socioeconomic malaise entirely more depressing than a recession" and living through one. Ditto, "Leaders coming out of a crisis are never the same as those who enter" and "In order to get through this, we need to go through this."
Words are words but action speaks louder, market indices aside.
I keep close tabs on the state of the financial industry. After almost 20 years of fighting the good fight and acting in a manner consistent with what I was taught-that all you have is your name and your word and honesty, trust and respect are the foundational constructs of any successful endeavor-my view of the state of the union is in a word, surreal.
As I read headlines about people I know and places I've been, I feel both saddened (for the many lives affected) and grateful (that I've operated as I have throughout the course of my career). As we're a reflection of the company you keep, many on Main Street reflexively believe everyone on Wall Street is a crook.
I'm taking the variant view; shockingly enough for those who know me. I believe there is a better way to do business and the ability to surround ourselves with people we trust who possess skill-sets that complement our own won't just be luxury, it will be a need.
If you're on the same page-if you're a Minyan-help us help you by spreading the good word of what we do and how we do it. We are, at the end of the day, a community and when push comes to shove, we watch each other's back and do so with steadfast loyalty.
Hit 'em hard this week and remember, let's be careful out 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 email@example.com.
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