Random Thoughts: The Most Important Levels in the Financial World!
Chewing through a slew of crosscurrents as we edge toward year-end.
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!
- My attention was focused on the important stuff earlier this week.
- 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.
If you listen closely enough, you can hear the performance anxiety percolating in the marketplace.
As the savvy, soothsaying sommelier Jeff Saut told us, fund managers are wishing that the market trades lower so their underperformance doesn't look as shabby.
And if you haven't seen Jeff is some seriously snazzy Western duds, you haven't fully experienced life to its fullest!
Barry Ritholtz and Peter "Zoolander" Prudden chew through China Syndrome before Festivus kicked into high gear. This is the definition of smart market commentary so take a view when you get the chance!
- Only 11 more sessions until we wipe the slate clean, and then we can play it again (Uncle Sam!).
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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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