Random Thoughts: Payroll Data Puts Big Ben in a Box
Hello jobs, farewell QE3?
While I've long been suspect of the BLS—watching more than 20 years of massaged data will do that— the "U6" unemployment rate (which I consider more realistic) is down to 15.2%, which is a marked improvement from prior levels.
Here's the twist; while this is great PR for the president—the election is one of our perceived catalysts in our 2012 preview—it puts Big Ben in a bit of a box. Whispers of QE3 have been a tailwind for the bulls, and this will quell that chatter—at least until the next domino falls through Europe. I still sense there's unresolved business to the upside—S&P 1360 remains in play, as long as we stay above S&P 1265—but you know it won't come easy.
As I shared these thoughts on the Buzz & Banter this morning, the S&P futures were up six and change and I opined that we would likely see a dip into Red Dye today. From there, we'll monitor our trading tells (Bank of America (BAC) and Deutsche Bank (DB) as stateside and overseas financial tells), Apple (AAPL), Google (GOOG) and Amazon (AMZN) as beta proxies, and market breadth.
I've removed the dollar as a contra-tell, as I've been vibing the potential for the greenback and assets classes to move higher in sync given the situation overseas. Ultimately, I remain in the camp that the greenback and asset classes won’t rally in sync for a prolonged period of time, but there are stretches of exceptions to every market rule.
Real risk remains—don't be blinded by the light—but the destination we arrive at pales in comparison to the path we take to get there. One step at a time as we together find our way.
The "oh-by-the-way" overhang on any market rally will be the $7.6 trillion bar, er, bond tab that comes due this year. This is the equivalent of Pirate's Booty on steroids but the question, again, is one of timing.
Why the rally to start the year? Because there were 360 more days to manage risk following the countdown to 2012, where performance anxiety ran rampant. I will also note that the top tick for the 2011 year-end gamesmanship was T-3 (three days before the last trading day), as we sensed it might be.
If you haven't read the Steve Jobs biography, I strongly urge you to do so. I knocked it out last week, and was actually bummed when I finished the 650-page narrative.
Everything fell into place for my Raiders to make their first playoff appearance in a decade but unfortunately, they blew it and left greener pastures to my imagination. Syracuse hoops is No. 1 in the land, however, and while rankings don't matter until March, it's nice to see those kids performing as they are.
Research in Motion (RIMM) is up more than 10% since before the break. At the risk of Eddie Mushing my position, I continue to hold this stock. I happen to agree with Sean Udall, as he's outlined on the Buzz and in his TechStrat newsletter, that if they adopt the Android platform, the stock could trade with a 20-handle. As always, just one man's humble opinion.
We spoke about the potential for a measured move to S&P 1360 in December and while we're far from tickling that fancy, the price action this week makes that potential...well, less far-fetched. The catalyst for me, as discussed at the time and self-evident now, wasn't the reverse dandruff in the S&P, but rather our tried and true peripheral tell, BKX 40. We're above there now, with the 200-day (BKX 43.20) looming large above.
I had my first airplane “situation” with our soon-to-be-eight-month-old daughter, Ruby, this week. Well, three situations actually, which meshed well with two other kids (happy birthday Gavin and Mug!), 10 pieces of luggage, two separate planes and one broken baggage claim conveyer. It’s funny in hindsight; at the time, not so much!
Keep in mind, courtesy of Professor Jason Goepfert, that when the first week of trading is positive, the entire year has also been positive 77% of the time, with an average gain of 11.8%. That factoid may have a binary asterisk on it, but it's making the rounds and I wanted to plant that seed in your crowded keppe.
- On a personal note, I would like to take a moment to thank ye faithful for your continued support of Minyanville. This is our tenth year of operations—in the 'Ville and in The RP Foundation—and none of it would have been possible without YOU. Gratitude is latitude, and I would be remiss if I didn't share our appreciation as we kick off what promises to be another wild ride.
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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 firstname.lastname@example.org.
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