Todd Harrison: Freaky Friday Potpourri
Vibes and scribes from the front lines.
We're all confused; what's to lose? You can call this song, the United States Blues...
-- Grateful Dead
Freaky Friday is upon us as the world casts a wary eye toward the Middle East.
If you're feeling like we just went through this exercise -- managing risk into the weekend against a fragile geopolitical landscape -- you're correct.
I recall one particular Friday when the Ukraine didn't matter, which provided a pretty solid tell that higher prices were in the cards. This is a different situation, of course, but the same premise applies: We can learn a lot just by watching, and crude should be the primary proxy on our radar.
Adding spice to an already spicy mix, Intel (NASDAQ:INTC) raised its Q2 revenue forecast late yesterday, providing a fundamental shot in the arm for the stock.
With Intel pegged to the PC industry, where they make most of their cake -- and after two years of declining global shipments -- we should watch the wake that this pebble leaves in the pond (INTC --> SOX --> NDX --> S&P). The stock ran 10% over the last month into this news, so that should be factored in as well.
Only a few more hours before the weekend, so let's do it right and make it count. Good luck, and play like a San Antonio Spur today.
Bullish sentiment spiked to the highest level of 2014; it remains to be seen if the consensus is again rewarded.
- It feels like déjà vu all over again in Iraq; keep an eye on crude as a proxy for unrest in the region. Crude $105 is/was an important technical level.
Can't say I'm surprised to see conflicts escalate throughout the world; it's one 'theme' I wish I whiffed on.
Europe trades flat; it may be the tail to the US dog, but it's worth noting as we fire up the final fifth of this freaky week.
Three words came to mind yesterday: "Bend, not break." That's the knee-jerk reaction to "down" tapes; old habits die hard.
- The Bloomberg Smart Money Index hasn't been that smart over the last month or so, but smart people are patient, or so it seems.
- I asked the talented Jason Goepfert of Sentimentrader about the relationship between crude and the transports. His response: "There is probably some kind of correlation somewhere between them on some time frame, but looking at monthly correlations over the past 30 years, it is only slightly negative and not significant. Below is a scatter plot between transports and crude oil since 1984."
GW Pharma (NASDAQ:GWPH) has been on the move again, consistent with some of our recent thoughts on cannabis.
Goldman (NYSE:GS) and Morgan (NYSE:MS) bucked the trend in the financials yesterday; watch these stocks. As go the piggies, so goes the poke.
It's universally accepted that higher crude is a "tax" on consumers. I would argue that it depends on why crude is going up or down. And was that discussion really eight years ago already?
I never got the "buy two shares of Twitter (NYSE:TWTR) and short one share of Facebook (NASDAQ:FB)" pairs trade on, although I'm long Twitter at lower levels. I still think paired exposure (playing the alpha) makes sense.
- Every time the VXO (INDEXCBOE:VXO) gets close to 10, it has paid to fade stocks (lower), at least for a trade.
- A long, strange trip indeed. 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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