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business newsThe Week Ahead: BP, Goldman, Apple and Ireland
Levels of lore surround us!
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A popular back-of-the-envelope trading axiom is that tapes tend to probe the prevailing direction following an out-sized move the previous session. Given the gaggle of naughty redheads on Friday—banks got hit for 6%, the semis lost 3%, the Russell was 4% lower, drillers spilled 4% and gold and silver were off 1.5% and 3%, respectively—it’s safe to assume that Boo will attempt to turn the downside screws and test the will of the bulls.
In terms of risk context---and remember, technical analysis is a better context than catalyst— S&P 1040-1050 is a zone where the bovine brigade will likely circle the wagons, just as S&P 1100-1115 remains an important resistance zone. I would also note that the banks are back below BKX 50 and that’s been a pretty snazzy stealth tell for the tape
Click to enlarge
The Moody's downgrade of Ireland (to Aa2) shouldn't come as a shocker to ye faithful--Ireland and Greece were the weaker links we fingered in January--and while equity proxies have thus far paid no mind, the credit markets sat up and took notice.
Sovereign wideners included Hungary (16%), Austria (+14%), Ireland (+5%), Romania (+5%) and Croatia (+4). Remember back to February 2009 when Professor Peter Atwater opined Eastern Europe was the next "Subprime." Talk about the financial news you need to know before you know you need it!
Finally, it should be noted that Friday's supply again arrived with higher volume (vs. the light volume rallies we've seen) and that's a sign of distribution (yes, some of that can surely be attributed to options expiration). Give the tape a few hours to digest that hangover, respect the avalanche of overnight news on tap this week and think positive, Minyans; profitability begins within.
Random Thoughts
- The financial overhaul bill is akin to adding a few cops to a crowded city and hoping a riot doesn’t break out.
- While one day does not a market make, Friday’s watershed, all-encompassing and particularly unpleasant action was precisely what a Phantom feels like.
- It also touches on the notion of correlation that we touched on last week when we channeled Professor John Succo.
- You know my take on where we are in the process of price discovery; that doesn't make it right, it simply makes it honest.
- I really do look forward to being a big picture bull. In all likelihood, when that time arrives, nobody will want to know from it (think last February and March).
- The trick to the trade—in markets and life—is to enjoy the journey. In "this" realm, that means making money through the lens of risk management over reward chasing. In "that" realm, it means being mindful of the moments and paying attention to the daily clues that surround us.
- You have no idea what I'm talking about, I'm sure. But don't worry...you will someday.
- Funny how Goldman (GS) migrated to our oft-discussed $150 level and got stuck like a pig.
Click to enlarge - Ditto General Electric (GE) as it ran directly to the all-important $15 level into earnings.
- Elin Nordegren got more money than Goldman Sachs was fined?
- Question for i-Minyans; experiencing dropped calls is one thing but has anyone had a problem with calls not registering (missed calls, messages)? Just trying to find my way with the new Apple (AAPL) iPhone 4 as I order my free case (of Sam Adams) from Steve Jobs.
- Please keep an eye on Apple as it edges towards the neckline of some rather symmetrical dandruff (chart below). Someone once said there’s a difference between a great company and a great stock; if we break this zone, that axiom could play out in real-time.
Click to enlarge - I’ve still got on 60% of my aforementioned BP (BP) put position (updated in real-time on the Buzz & Banter) and will continue to unwind that exposure as a function of time, price and defined risk as it was a pure trade.
- The most important level for tech? NDX 1660ish, which I haven't heard mentioned anywhere else. Why? Check out the chart below; if there's to be a massive reverse dandruff formation--which would be bullish--that 'right shoulder' must hold.
Click to enlarge - If I didn't shave until the Raiders win the Super Bowl, would I look like Billy Gibbons?
- Imagine if Robin Givens married Billy Gibbons and hyphenated her last name?
- Festivus for Children’s Education. Friday, December 3rd. New York City. Noice.
- Look “up and out” not “down and back.” Trust me on this one.
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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.
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