Random Thoughts: Will the Market Hold Tight Until Turnaround Tuesday?
Powering up a fresh five-session set.
It was a shortened week but we covered a fair amount of ground, including Ten (oh by the way) Themes, A Tale of Twin Tails and The Box That Ben Built.
And while I've never been a momentum guy, per se-I always respect but never defer to the price action-Hoofy the Bull continues to hold the reigns above our aforementioned (reverse) acne at S&P 1265, and our stealth friend, BKX 40.
With that said, I expect to see some gruesome gut checks this week-Turnaround Tuesday?-as European headline risk carries over to the New Year, and we must see both sides of that situation.
That's why I'm keeping a tight overnight leash on my risk and playing more situations and less "tape." Through that lens, I power up this weekly pup holding my Research in Motion (RIMM) common stock, for reasons discussed, with my eyes wide open and my right hand up.
Some Random Thoughts:
- We know there are "twin tails" in 2012 and they're binary, which is to say that one side of the trade is going to win big, and the other will get crushed. Middle ground is so 2011.
- While the dollar has lost-or will lose-some of its predictive (contra) power, I continue to feel that the commodity complex will show us the way.
- This isn't about any particular opinion-The Gold Scold triggered a 20% move in the yellow metal, and I wasn't involved for any of it-but commodity volatility not only precedes equity movement, it also holds directional clues.
- While there is a camp that believes that gold could decline as the fear trade recedes (which would be bullish for stocks), I don't buy it. If gold-or silver, for that matter-crack, the stock market won't be far behind, or at least that's my take.
- Google (GOOG) continues to trade heavy, while Apple (AAPL) has further pep in its step following the upgrade this morning from Goldman Sachs.
- Flava Flav should do a JV with Bobby Flay; they can call the chain, Flava Flays.
- $20-odd billion in European debt comes due this week; so you know.
- I've been weighing "the reaction to news" (which is always more important than the news itself) but I've yet to determine how that nets out. Is it bearish that the tape was flat given Friday's stronger-than-expected economic data, or bullish that the tape continues to exhibit a firm tone given the news flow out of Europe?
- The honest answer is 'I'm not sure," and I'll let the tape talk to me in the near-term rather than press or guess with my hard-earned coin. (Remember six years ago when I opined it would soon take three times as much work to make half as much money? True dat, eh?)
- Deutsche Bank (DB) was the biggest fly in last week's upside try, dropping 14% over the last three trading sessions.
- The homebuilders have broken out to the upside! Of course, where you stand is a function of where you sit so I've included two charts, one with the pennant breakout to the upside, and the other as a reminder of the longer-term downtrend, which remains 30-odd percent above current levels
- Will someone please remind me in December to short the winners and buy the sinners into the first week in January?
- Will videos like this mark a short-term bottom for the financials?
- Do markets ever crack when everyone is expecting them to?
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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 email@example.com.
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