Random Thoughts: The Banks, Gold, and History Repeating
Observations from the front on a summer Monday.
Welcome to the back-half of August, where the trading ranks are thinner than my hairline. As folks balance the markets with their vacation schedules, the world's wildest reality show continues in real time.
Here's what I'm thinking about, in no particular order.
The stock market is sitting on the level we spied last week, S&P (INDEXSP:.INX) 1650. With the underbelly of the broken November trend-line up at S&P 1700, we enter this week with a stair-step range of S&P 1650-1700. Below that, the S&P 200-day moving average resides at S&P 1550 and longer-term trend-line support arrives at S&P 1500.
After the worst week in the Dow Jones (INDEXDJX:.DJI) this year, conventional wisdom dictates that the tape will bounce given the proximity of support. This is precisely why we look at the tape through a stair-step lens; should we break below S&P 1650, past support will morph into future resistance.
I continue to sit with a few shekels on the snake eyes (December SPY (NYSEARCA:SPY) puts), which has been either wrong or early but defined (by the capital invested in the puts) either way.
Back in 2007, we were proactive in sharing our vibes on the global financial machination and caught some heat for being too bearish, too early. This year, I feel early again, whether it's the perception of the Bernanke Call, the devolution of social mood, or the dependency on digital markets (HFT, Twitter, and the like). It won't matter until it does -- if it does -- but this is a forum for thought provocation, so I'll continue to share.
Why? I continue to believe there is a chasm between perception (all-time highs) and reality (look around); what has proven elusive is the timing given the artificial nature of the tape (HFT, Fed). It's frustrating on a few levels and I'm not immune, which is one of the reasons why I've loosened my grip on the handlebars this summer.
The only thing shifting faster than the financial realm, quite possibly, is the media realm. The Chinese have a saying (which is actually a curse): "May you live in interesting times." It's a good thing I strive to view obstacles as opportunities or it would be daunting.
There are a few standouts today in the tech realm -- Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), LinkedIn (NYSE:LNKD), and Tesla (NASDAQ:TSLA) among them. If I didn't know better, I would offer that fund managers are feeling the performance anxiety heat and playing ketchup through the high-beta realm.
I am proud to be involved in an upcoming documentary on the Federal Reserve, Money for Nothing. If you would like to learn more about this excellent (and most timely film), you can click here.
I watched the entire first season of House of Cards this weekend on Netflix (NASDAQ:NFLX). It's no 24, but it's right up there in terms of quality television series. It was all made possible through the Apple TV that my wife picked up last week, which is "OK," but I haven't dived deep yet.
- Market breadth is 3:1 negative. That -- and the price action in the financials -- is the feather in Boo's cap today. Should S&P 1650 give way (and become resistance), he would have another feather. His goal, quite obviously, is to turn into a peacock.
- Remember when we juxtaposed gold against the S&P and offered that either gold should rally or the S&P should come for sale? I've updated that chart below.
- We spied the price action in the financials out of this morning's gate on our real-time Buzz & Banter (click here for a free trial); they continue to drift, with JPMorgan (NYSE:JPM), Goldman Sachs (NYSE:GS), and Citigroup (NYSE:C) leading the way. Support in this complex will come into play at BKX (INDEXDJX:BKX) 62-half or so, per the chart below.
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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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