Todd Harrison: Juan Pablo and Fresh All-Time Highs
Investors embrace yet another new paradigm.
It's Freaky Friday on Wall and Broad, with butterflies and moonbeams in short supply.
With the S&P 500 (INDEXSP:.INX) breaking out to fresh all-time highs yesterday, the mood on the Street -- Wall Street, anyway -- is borderline giddy. Or, as my friend Josh Brown summed up in what may well be my all-time favorite column of his, Everything Is Awesome.
And it is awesome, if you closed your eyes at any point since March 2009 and rode the market higher.
While there is ample debate on the "why," the "what" speaks for itself -- and it's speaking loudly. As I wrote last Friday when I looked around and looked within, price is the ultimate arbiter of variant financial views.
We've been all over S&P 1850, for obvious reasons. Hands over ears and eyes wide shut, as long as the bulls hold that level, the pattern "works" toward the S&P 1960s. You can agree or disagree but that's what the chart is telling us, speculative excess and societal acrimony be damned.
You know it won't come easy. Yesterday, I punted some S&P calls and violated one of my own principal rules: Never let an opinion get in the way of making money. I have a bad habit of over-thinking the market at times, or what used to be known as risk management.
Maybe I'm just showing my age; I'm old enough to remember things like the business cycle and silly enough to believe that bad news might eventually matter.
But this time is different.
China is fidgeting with its currency and nobody seems to mind.
Citigroup (NYSE:C) guides lower and the stock trades higher.
Tesla (NASDAQ:TSLA) issues a covert after rallying 130% in three months, and there are buyers everywhere.
I can't help but think to myself, what would Juan Pablo do?
His guess is as good as mine.
- The Russell 2000 (INDEXRUSSELL:RUT) also hit an all-time high yesterday and RUT 1182 morphs into near-term support, right next to S&P 1850.
- The trannies, Dow (INDEXDJX:.DJI), and (in my view, most importantly) the financials (represented by the KBW Banking Index (INDEXSP:.BKX) haven't confirmed this latest breakout. BKX 71.5 is the technical confirmation for the banks, if and when.
- Readers of this space know that we've been talking about the opportunities in the cannabis space since 2012. While it's been a hot topic on CNBC and Yahoo Finance of late -- including my segment yesterday -- many of these stocks have enjoyed spirited sprints since it was first discussed.
- It's essential to map your time horizon and risk profile whenever you put money to work, and to understand where we are, we have to appreciate how we got here; 500%+ runs in a matter of months scream "too hot, too fast," but I still love the space with a longer-term lens.
- The Chinese yuan suffered its biggest drop ever as regulators punished speculators ahead of a key government meeting next week. Smart money I speak with tells me that carry trade implications are "contained," although I would offer that with the stateside indices at all-time highs -- and the VXO (INDEXCBOE:VXO) at 12ish -- there isn't much margin for error priced into the market.
- Bitcoin derivatives? That should be some pretty cheap vol.
- Long-term investors should filter out the noise. Active traders need not focus on the big picture. That's the nuts and guts of syncing your time horizon with your risk profile, which is one of the toughest tasks to master.
- My daughter Ruby pulled a Jim Valvano this morning when she woke up, running around the room trying to figure out who to hug first. It's the little things that keep us going.
- Good luck today; let's end this Mercury Retrograde with some jingle in our jeans.
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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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