The Mayan Prophecy Hits Wall Street
How to position for the post-apocalyptic market.
Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
As Mayans cheer from the sidelines, I awoke this morning to find horrific weather chewing through the east coast. Wind, rain, locusts, vermin, frogs...oh wait; those were the plagues of Egypt.
The Mayan Prophecy, according to the 5125-year-long cycle in the Mesoamerican Long Count calendar, suggests that a cataclysmic or transformative event will transpire on December 21, 2012. I hope you have your galoshes in hand, for as Richie from The Wanderers once learned, you don't mess with the Mayans!
Perhaps that's what the Republicans had in mind when they suddenly scrapped their vote for an amicable resolution that would avoid the fiscal cliff. "We're expecting highs in the 1250s todays," said one GOPer, referring to the weather chart below rather than the S&P. "We're stopped out either way!"
And yes, it takes two to tango; that wasn't a political statement, but rather a statement on politics.
In our discussions yesterday, we offered that the bears were licking their chops as everyone got bullish; they knew the bar of expectation for a fiscal cliff resolution was getting higher and higher while the commonality of interests on the Beltway - and the direction of social mood - was moving in the opposite direction."
Another reason I didn't climb aboard the Bovine Express - despite how well the tape acted around our twin levels of S&P 1435 and NDX 2700 - was the following observation: The path of maximum frustration often arrives when something seems so obvious; it tends to set the dreaded "off-sides" trap."
Indeed, while this crimson wind could blow over with the arrival of a single headline, my risk-profile has been constant for the last week or so: long situations and short S&P (small) through February out-of-the-money puts. It was house money when it was moving against me and it's house money now; meaning, the lion's share of my 2012 risk has already been stuffed into a stocking somewhere.
A few points of note before I flip lids and spend the rest of the session on the Buzz & Banter (click here for a free trial!). In no particular order:
Europe is bending but has yet to break; that matters in an interconnected world.
The financials have been a terrific tell so keep your eyes peeled for JPMorgan (NYSE:JPM), Deutsche Bank (NYSE:DB), and Goldman Sachs (NYSE:GS) in that complex.
- Gold; we flagged the commodity weakness on Wednesday as a potential precursor to an equity move lower, which arrived on cue this morning.
The $500 level in Apple (NASDAQ:AAPL) feels like a moth to the flame burned by the fire; the love is blind, can't you see that desire? I suppose that's the way love goes.
And so it's said and so you know, I'm Long Minyan Prophecies and Short Mayan Prophecies on a pairs.
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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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