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Random Thoughts: Making Sense of the Monday Madness

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The tape -- and traders -- digest the price action.

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  • Following last week's witch-hunt, French President Nicolas Sarkozy weighed in with some thoughts of his own: "Speculators and the markets should know that solidarity means something and that, if there's a problem, we are there," he said, as reported by Bloomberg. "The sooner we say that and the more firmly we say that, the more rapidly we settle the problem."

  • This seems consistent with the vernacular stateside and abroad and while I abhor invisible catalysts, the stage seems to be set for some sweeping reform on CDS. We've spoken about it at length -- here, here, and in this video -- and while it's not visible, we'll ask Minyans to please "see" the writing on the wall.

  • Remember when we posed the question, "If an accounting change can unwind the entire capital market construct, how stable is the market construct to begin with?"

  • The obvious question is therefore begged, if hedge funds could collude to take down sovereign economies, how stable are those economies to begin with?

  • Or, as Mr. Chanos and I would agree on, where do you draw the line between symptoms and the cause?

  • Before I scooted to Chattanooga for the Eastern Family Economics and Resource Management Association (EFERMA) conference, I pared some of my "blind risk" given 1) the stickiness above S&P 1120 and 2) the binary event that we mused would be "weathered away" regardless of the number. I still have a trading position, mind you, but it's Todd-lot relative to my traditional size.

  • As past support is future resistance -- and vice versa -- S&P 1100-1120 (or, through Coop DeVille's lens, S&P 1130) is the newfound bovine backstop, with S&P 1150 (previous highs) and S&P 1200 (more formidable resistance) the upside levels of lore. I'm suspect of the herd mentality (that clear skies await) but I've learned to respect the price action and see both sides of every trading equation.

  • Have you heard one person talk about a potential double top in the S&P? Me neither, but it warrants a mention, particularly as the bears clear out their negative bets and remove a future layer of demand in the marketplace. This is, so you know, very consistent with the "Pop & Drop" scenario we pointed to a week ago today.

  • We're started our annual effort to recruit snazzy human capital for Minyanville summer internships. For purpose of this post, I'll ask that anyone interested in being a Buzz Intern contact Matt Theal for further information. A description of the opportunity can be found here.

  • What is higher on the human body: the waist or the belly button? Seriously.

  • Sports pundits still predict the Orange will land a #1 seed regardless of what happens in the Big East Tourney so through that lens, I hope they've gotten the bitter taste of defeat out of their system before it really matters. Either way, March Madness is about to start and that's awesome, baby, no matter how you slice it.

  • Societal acrimony? What societal acrimony?

  • Meanwhile in left field, er, on the left coast, California will be launching a $2 billion muni bond sale tomorrow.

  • Double Down! The FDIC is encouraging pension funds to invest in failed banks.

  • A well-respected and extremely successful media maven suggested that I become more "polarizing" in my writings. If that's not suggestive of the current social mood, I'm not sure what is.

  • It was somewhat surprising to me that out of the entire Dow Jones Industrial complex, Exxon Mobil (XOM) was by far the largest laggard over the course of the last year.

  • Just as the financials are widely viewed as a leading indicator for the big board, so too are the semis as a proxy for tech. Through that lens, the (marginal) new high coupled with the far-from-snazzy relative performance by the Red SOX warrants a mention.

  • I will ask Minyans to remember that tomorrow is Turnaround Tuesday and that should be filed in the back of our crowded keppes.

  • The 50-month moving average is up around S&P 1145, for those who follow such things.

  • Foreigner or Dire Straits?

  • Marino's Italian Ices or Sno-Cones?

  • If you're diggin' the 'Ville, why not channel Faberge and do the critters a solid?

  • Links of interest? Glad you asked!


R.P.

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Position in S&P

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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