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Shallow Hal: The Bull-Bear Debate


Perception and reality collide as global investors get a grip.

"Who knows how long this will last; now we've come so far, so fast."
-- Don Henley

I'm back in the saddle following an off-site yesterday-no, I wasn't squatting for 24 tickets...yet-as the tape continued its march toward S&P 1360, which we targeted (through a pure technical lens) in December 2011.

The forward question is a simple one: Has the upside become too obvious (with the VXO again trading in the teens and the bulls coming out of the woodwork) or are fund managers so underinvested (after The Smartest Guys in the Room Screamed "GET OUT OF THE MARKET!") that pullbacks will be Shallow Hal consistent with the path of maximum frustration?

A few points of Parliamentary procedure, in no particular order:
  • European troubles haven't gone away (by a long shot) but they have quieted down, and the successful debt auctions this week will scare some bears.
  • The stateside economic backdrop has improved on the margin, with employment perking up into year-end. It's a lagging indicator, we know, but it will serve as reactive rationalization for the bulls.
  • The election is 10 months away; getting the troops home for Christmas was Act I in the re-election campaign. Sparking the market higher-or trying to, anyway-will be Act II (and yes, it's easier said than done).
With the S&P up 12% since the end of November 2011 (and 20% since the October 4, 2011 low), a fair share of the above bullets-bullish technical setup, a quieter Europe, economic validation and the electoral bid-is discounted; the questions we must wrestle with are "how much," and "what's next?"

Time and price are the qualifiers for that discussion and where you stand is a function of where you sit. Through a stair-step (risk management) lens, however, Hoofy the Bull will argue that it's "game on" for the bulls as long as the S&P holds 1265 and the banks remain above BKX 40.

Bank America (BAC), Deutche Bank (DB) and Goldman Sachs (GS), remain our financial tells while Apple (AAPL), Amazon (AMZN), Google (GOOG) are our beta reads.

Random Thoughts:
  • Given I was out-of-pocket yesterday; I didn't carry a big risk stick into today's session (although I've held 3/4 of a full position in Research in Motion (RIMM) since mid-December 2011).
  • I've got no horse in the game regarding the NYSE (NYX)-Deutsche Bourse merger, but I am watching the actions and reactions from regulators as a socioeconomic sign (globalization versus protectionism).
  • European banks are hoarding cash in front of their €600 billion of upcoming maturities in 2012. That should work wonders for the social mood across the pond.
  • I did my Lloyd Dobler impersonation this morning as I edge back into kickboxing. The last time I trained this way, I was in the best shape of my life…until I tore my meniscus.
  • Personally, I liked Hue Jackson but not enough to stand in the way of Reggie McKenzie, who promises to put some swagger back in the step of the Raider Nation.
  • A bit slammed this morning, so lemme hop. I'll see you over on the Buzz & Banter.

Twitter: @todd_harrison

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