The Week in Preview: Apple Inc., Banks, and the Third Potential False Breakout
Digesting multilinear crosscurrents one step at a time.
Good morning and welcome back to a fresh five-session set. Following last week's expiration-related volatility, the S&P (INDEXSP:.INX) closed precisely where it "should" have at S&P 1709. Past resistance is future support, and Technical Analysis 101 dictates that the time to buy a breakout is on the retest of the level from which it broke out, so the bulls will attempt to hold that zone as we edge into the new week.
Two points of parliamentary procedure: First, the "most bearish scenario" discussed last week will emerge if rates uptick despite the decision by the Fed to not taper. That wouldn't be an option if the Fed did what it hinted at (rather than attempt to play trader), but it is what it is and unintended consequences have become par for our collective course.
Second, we would be wise to respect the chart below, which highlights the false breakouts thus far this year, one of which led to an 8% correction and the other a 5% correction. Perhaps the third time is a charm, but the uniform belief that the Bernanke Call (as opposed to the Greenspan Put) is a risk-free reward is at the very least worthy of a nose-scrunch.
Over in Germany, Angela Merkel won her third term as Chancellor but missing from Angie's List was a majority decision. She's on the hunt for a coalition partner, and we'll get further clarity on that front on September 27 when SPD party leaders meet. In other news, the jawboning got off to an early start this week as Fed Governor Dudley suggested that the Fed should “act forcibly to push against headwinds," Fed Governor Lockhart said that "monetary policy can help promote a faster recovery," and ECB President Draghi said that the ECB is really to unleash another round of LTRO, if needed. Yeah capitalism!
In stock-specific news, Apple (NASDAQ:AAPL) knocked the cover off its weekend launch of the iPhone 5S and 5C, selling 9 million units (one of which was mine). That has triggered a pronounced "N's over S's" opening, with NDX (INDEXNASDAQ:NDX) outperforming S&P, which is masking the punky action in the financials (Goldman Sachs (NYSE:GS), Wells Fargo (NYSE:WFC), Barclays (NYSE:BCS), Morgan Stanley (NYSE:MS), and Citigroup (NYSE:C) are all down a deuce (2%).)
As go the piggies, so goes the poke, so keep your right hand up as we together find our way.
Good luck today.
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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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