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Todd Harrison: Markets Running to Stand Still


Random Thoughts on Turnaround Tuesday

Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO.

There is a bull market in prognostication. With the Dow Jones Industrial Average (INDEXDJX:.DJI), S&P 500 (INDEXSP:.INX), and Nasdaq (INDEXNASDAQ:.IXIC) straddling the flatline year-to-date (+/- 2% either way), you don't have to look far for a litany of opinions. We touched on this last week with The Ever-Changing Media Landscape, which you may have read if you didn't blink.

Call it the democratization of media, the evolution of content, or information deflation; as consumers, we're sipping water from a digital fire hose. There are few places where this is more self-evident than within the financial realm, where everyone from Carl Icahn to parody pseudonyms scramble for varying levels of attention. 

Having played in this space for 15 years, we've employed several strategies to address the shifting landscape, including a vertical lens (as opposed to a horizontal swatch across the audience pyramid), tiered content (financial media has a competitive advantage over traditional media), and MV Studios, which has created a new and different revenue stream.

Over the last several months, we've been weighing another approach, one that could conceivably shift the daunting dynamic that has weighed heavily on the space. It stems from the precept that companies must be publishers in the digital age, content is the best online currency, and the ability to turn clients into community will drive value through a lifetime lens.

Time will tell if these thoughts manifest in kind; we live in a multilinear dynamic with many moving parts. I will share, however, that the traditional online media model is broken and publishers need to adapt to survive and yes, thrive. That can take many shapes and directions, of course, which is why we do what we do, how we do it.

Random Thoughts:

  • Was that the "SMART" money fading (read: buying) the market meltage yesterday? I'll let you be the judge. We're still at "2007 levels," which is subject to change but hasn't changed yet, per the chart below.

  • BKX (INDEXSP:BKX) 67, RUT (INDEXRUSSELL:RUT) 1112, and IBB (NASDAQ:IBB) 221.50 are the 200-day moving averages for the banks, small caps, and biotech complex, respectively. Through that lens, I suppose the bounce yesterday made sense -- the question, of course, is whether they'll continue along the same path.
  • We've been talking about volatility for some time now, using the VXO (INDEXCBOE:VXO) as a proxy. "Low vols" made sense when liquidity was being pumped into the system (volatility is the opposite of liquidity), but it remains to be seen if it's artificially low. It's a throwaway thought, admittedly, but the implications are huge.
  • The last time Twitter (NYSE:TWTR) reported earnings, it had an insane run into the report. The stock is trading 37% lower now than it was then, which brings the specter of "field position" into play. As a general rule of thumb, stocks that are overbought get sold on good (not great) news, and stocks that are oversold get bought on bad (not horrible) earnings. The level of lore is $40, per the chart below.


Twitter: @todd_harrison

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