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business newsWill China Wag the Dog?
The global growth engine sputters.
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When we last left, it was a particularly blah summer Monday that aimlessly meandered towards the third lowest volume day of the year. With quarter-end
We awoke to find that world a bit perkier. China, presumably the dog that wags the global growth tail, broke a triple bottom. OK, it didn't just break it -- it crushed it, losing more than 4%. Remember, we flagged the trend-line break in April near Shanghai 3000. The index is down 24% since then, 28% since November and 30% since last August. Yikes.
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On the sovereign side, Greek spreads tightened, which is on the margin bullish, although credit markets still indicate a 57% chance of default. Hungary stood out the other way, widening 7%, indicating "only" a 23% chance of default. Me? I'm not hungry and I'm only partially at fault, as these things go.
Closer to home, and viewing the dew through a technical lens, S&P 1040 -- our home grown version of a triple bottom -- is the level of lore and a breach of that zone "works" 20% lower, to S&P 860. Again, this is loud and a bit obvious, so take it for what it's worth, which is one of many tricks of the trade.
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I’ve been updating my trading posture in real-time on the Buzz & Banter, which is our best in breed content for the nuts and guts crowd (take a free trial). I will however share that I made my first partial cover yesterday against a downside bet that was slapped on at S&P 1115.
Should I have waited one more day? You can't think like that when trading. Much like a scale doesn't tell you how much you weigh -- it tells you how much you weighed -- every day's a new day for the flickering ticks and we must continually clear the mechanism.
One of the first lessons I ever learned in this business is that when you bum about making money, it's a recipe for losing money. I traded "in between" on that S&P position as a function of quarter-end uncertainties and the looming, thinning holiday stretch, one that will find me unplugged next week.
I won't look back and I won't back down; opportunities reside in the ride ahead.
Random Thoughts:
- There ain't gonna be no rematch, and there ain't no such thing as a quadruple bottom.
- Note the 23% rally in fear index (VXO)... today.
- While I've read and reread the first bullet -- and you know my sense that we're in The Eye of the Storm -- we must respect both sides of the ride. That’s why I continue to “trade around” my risk, in real-time on the Buzz.
- If you're looking for some quality trading ideas but can't keep up with the Buzz all day, take a free peek at The Stock Playbook for Dave Dispennette's nightly views.
- After playing a few full court games last night -- there's nothing more frustrating than "individuals" who don't understand the concept of "team play" -- I sat down to scribe my midyear review, which took me deep into the night (sans A/C, as luck would have it). That puppy will post bright and early mañana in the ‘Ville.
- Friday will mark my ten-year anniversary of scribing vibe and sharing my stream of consciousness. It’s been some journey but something tells me we’ve only just begun.
- Today’s market breadth? Punky Brewster at 8:1 negative.
- Banks? Edging away from daddy's nemesis (BKX 50).
- Big beta as bang-for-the-buck quarter-end ketchup plays? Apple (AAPL) and Google (GOOG) are down double digits while Baidu (BIDU) and Amazon (AMZN) are getting hit for a finski (-5%). Y'all think someone was "fronting" a perceived quarter-end mark-up? Perhaps; that's why you should never trade invisible catalysts!
- Don't think for a second the folks on the Beltway aren't acutely aware of the importance of S&P 1040. You can agree or disagree with the tactics of the invisible hand but if nothing else, they've earned the respect of Boo's Bandits.
- Boo's Bandits... says a lot, right? Once upon a time, the short side was a natural and necessary balance in the process of free-market capitalism. Now? Much like "big business," they're considered pure evil by the majority of the mainstream population.
- Aw Jeez, look at General Electric (GE). Consistent with the dandruff pattern in the S&P, a "measured move" in this gorilla "works" to $10 and change.
Click to enlarge - I spoil my felines, as that's my nature. The crazy thing is that no matter what toys and treats I get them, "Crash" will opt for a bottle cap over any other object. That's just awesome at 3:00 in the morning. Do you think he's trying to tell us something?
- Deep breath, Minyans, profitability begins within.
R.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.
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