US Stocks: The Bulls Give Thanks to Start the Week, but Will This Mood Last?
The good, the bad, and the ugly.
The world is awash with positive vibes as we power up this holiday-shortened week, with the proposed accord on the Iran nuclear program providing the latest spark.
Performance anxiety—a backdrop in market action and the context for the long squeeze we’ve been talking about for the last month—is playing an equal if not greater role in early-morning trading; fund managers need to buy their kids a G.I. Joe with a Kung-Fu Grip.
With 25 sessions left in 2013, the bulls continue to ride the benefit of the market’s doubt as the bear case—and in many cases, the bears themselves—continues to be debunked.
Historic government balance sheet, you say? No problem, the Fed will never sell the oodles of mortgage-backed securities it owns.
Income disparity and the negative impact on social mood? If they’re not fully invested, let them eat cake.
Tapering? Heads I win (the economy will be better by the time they take away the punch bowl), tails you lose (or they won’t!).
We can debate these perceptions—personally, I think the Iran accord pushes Israel closer to unilateral military action—but that’s conjecture on a holiday-week Monday.
Through a pure trading lens, we will monitor our tells (breadth is balanced, banks are outperforming yet again, and high beta is a bag of mixed nuts) and watch our levels (S&P (INDEXSP:.INX) 1775 is the downside level of lore) as we eye the tryptophan and prepare to give thanks.
Random Thought: The Gold Fold?
Remember the head-and-shoulders pattern in gold we flagged a while back? It triggered, with the downside move through $1,250. As long as that level remains above (read: defined risk for the bears), this pattern "works" through a pure technical lens to gold $1,065.
Technical analysis is just one of four primary metrics (fundamentals, structural, and psychology being the others), so take this with a grain of salt as we together find our way.
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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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