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Random Thoughts: The Most Important Levels in the Financial World!

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Chewing through a slew of crosscurrents as we edge toward year-end.

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MINYANVILLE ORIGINAL

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

It's the morning after the FOMC decided to peg QE-finity to jobs -- good luck with that! -- and the tape is weighing that effort (after an evening of digestion) and juxtaposing it against the animal spirits that emerge this time each year. Performance anxiety is a powerful force -- just ask Bob Dole!

Some random thoughts:
  • How much of a perceived fiscal cliff resolution is baked into the current tape, and does it remind anyone else of the ramp into QE3?
  • How many spending decisions are on hold pending resolution of the fiscal cliff?
  • There is a huge difference between a stock market recovery and an economic recovery; could it be that when we resolve the political discord, at least this latest manifestation thereof, those switches will flip and the economy will improve as the market ratchets lower?
  • Just when we got used to Apple (NASDAQ:AAPL) as the most important stock in the world (hand raised), the Cupertino crowd-pleaser has fumbled the baton on the path of maximum frustration. It will regain its status as the super-tell of the universe if the Nasdaq (INDEXNASDAQ:.IXIC) gets sloppy into year-end.
  • I haven't touched my risk profile for a handful of reasons. Among them:
    • My attention was focused on the important stuff earlier this week.
    • I've booked the lion's share of my pad after a decent year of fighting the good fight.
    • I'm long "situations" and short the tape (smallish) against them via S&P (INDEXSP:.INX) February out-of-the-money puts.
    • If you press for performance, as many people are, odds are you'll nick yourself with 1,000 paper-cuts.
    • I've got more meetings than eHarmony as we tie-up another thriller in the 'Ville, and I know that if I'm not 100% laser-focused, I'm at a natural disadvantage to my counter-party!
  • The downside price action in the metals jumps out; commodity volatility is typically a precursor to equity movement, per the chart below.
  • While Research In Motion (NASDAQ:RIMM) may be extended following the 100% rally in the last few months, it would be wise to sync your time horizon with your risk appetite if you've got a longer-term lens. I've included the chart below for your viewing pleasure. Remember, the trick to successful investing is to buy low and sell high.
  • S&P 1435 and NDX 2700 remain the levels of lore for traders galore and both were rejected yesterday by da bears.
  • Why do they matter so much? If the S&P can bust a move higher, through that level, it "works" through a pure technical lens, to S&P 1520.
  • If the NDX can giddy-up through NDX 2700, it "works" to NDX 2900. I've added those charts below as well, but remember -- technicals are a risk context and not, in and of themselves, a catalyst.
R.P.

Twitter: @todd_harrison

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Position in SPX.

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.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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