Random Thoughts: Catalysts Abound Heading Into the Holiday
Banks, oil, Greece, Portugal, China, Brazil, and jobs jockey for attention.
The half-day hump is upon us heading into tomorrow's holiday celebration, and while the world is particularly tenuous, stateside stocks have thus far shrugged their shoulders, thank you very much.
Above and beyond the overseas catalysts we fingered yesterday-Egypt and Greece, among others-there are a slew of fresh concerns for investors to digest, including but not limited to:
Deutsche Bank AG (USA) (NYSE:DB), Barclays PLC (ADR) (NYSE:BCS), and Credit Suisse Group AG (ADR) (NYSE:CS) had their ratings cut by Moody's. We fingered the sloppy price action in these shares all week on our real-time Buzz & Banter; it's hard to believe someone didn't "have this."
Crude popped through par ($100) on tensions in the Middle East. While I'm of the view that lower crude is the biggest issue for global markets (one of the bigger misperceptions in finance), further gains, if substantial, would crimp an already bent consumer.
Brazil is quietly down 26% this year (32% in USD terms) and trading at 2009 levels. In the immortal words of Mr. Miyagi, "Wax off!"
High-level defections continue in Portugal in front of the €10 billion of bonds due come September (anyone else having a flashback to Pirate's Booty?). Rates are pushing 8%, for those keeping track of such things, and that matters to the rest of the eurozone.
- While Shibor concerns have abated in China for the time being, the economic data continues to be uninspiring, almost by design. It's pretty amazing, actually -- the notion of a free market.
We just witnessed the first time in the history of the SPY (NYSEARCA:SPY) that it opened and closed in the bottom half of its intra-day range for four straight days. We flagged that dynamic (early strength giving way to afternoon supply) on the Buzz yesterday; I didn't realize the back-to-back-to-back-to-back events had historical significance; hat tip to Jason Goepfert for that observation.
The S&P (INDEXSP:.INX) again failed at its 50-day (now at S&P 1625) smack dab in the middle of the danger zone (the updated chart is below). S&P 1600,
past support resistancecurrent support, is the line in the sand that the bulls must defend, and thus far they're doing an admirable job.
I continue to trade around my current bias, updated in real-time each day on the Buzz; click here for a free two-week trial. All the while, I am reminding myself that discipline must always trump conviction.
Good luck today, and keep an eye on S&P 1600; if it breaks, it morphs back into resistance and all four resistance levels in the danger zone will again be overhead.
I've been weighing whether the relative normalization in Shibor is a tangible and constructive shift in the global landscape or 1) a give-and-take in a larger dynamic and 2) the reason the world has rallied this last week.
The gold rally continues, consistent with our vibes on Friday. I view this as a countertrend bounce but I've been wrong before. We have inflation in things we need, deflation in things we want; thus the question is posed -- do we need gold?
The Internet is the most deflationary invention of all time, which is great if you're a consumer but not so much if you're a manufacturer.
I maintain that credit of a different breed -- that of credibility -- will be the issue at hand for markets at large before this grand experiment is laid to rest.
It feels like every feral cat in Long Island has taken up residence in our backyard. I sure hope they feast on cicadas (we haven't seen or heard from those insects yet so fingers crossed we miss the invasion).
A sideways market above support is called basing; a sideways market under resistance is called churning.
- I added Apple Inc (NASDAQ:AAPL) to the Gold vs. S&P chart, just for schnitz and giggles.
There is a LOT of societal acrimony floating around the Twittersphere, which I try to avoid at all costs. We all have hot streaks and cold streaks -- if you trade long enough, those are your stripes -- and how we conduct ourselves in both situations says a lot about who we are as people. Don't get caught up in the Bahama drama; it's just not worth it. Let's stay long humility, short hubris in size.
We'll get the jobs report on Friday, which is awesome considering most folks will be enjoying an extended holiday weekend. It will be extremely thin, a fact that likely isn't lost on the gorillas in our midst. If you're gonna enter that session with risk on, make sure it's right-sized. The last thing you want for the Fourth of July are fireworks in your portfolio.
- As always, I hope this finds you well.
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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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