The Post-Hurricane and Pre-Election Financial Markets
Seeking normalcy, one step at a time.
Some Random Thoughts:
Per my Friday column (and don't shoot the messenger), I believe that this latest crisis, and the reaction to said crisis, bodes well for President Barack Obama securing another four years in office. As a registered Independent, I have no political motivation for sharing this but for those looking to position risk, that's my guttural sense.
"Inflation in things we need (energy, education, insurance) and deflation in things we want (plasmas, cell phones, laptops)," a longstanding Minyanville theme, has been on full-fledged display on the East Coast over the last week, as was the "haves" vs. the "have nots," which was literally defined by a demarcation line on 40th street across Manhattan all last week.
I wrote two weeks ago that "Frankenstorm -- the combination of Hurricane Sandy from the south, a winter storm from the west and an arctic air blast from the north -- is due to settle over the NYC area early next week. That will shape the financial tape -- volatility is the opposite of liquidity -- and has the potential to impact the election the week after (depending on the fallout, power losses, and of course, the political history the last two elections)." I continue to feel that will happen, but that Obama will prevail.
- The S&P (INDEXSP:.INX) is churning under resistance (as opposed to basing above support) per the chart below. I will also note that the rally attempt on Friday failed directly at the 50-day moving average, which makes S&P 1380 (200-day) all the more important as the next support zone.
- Conversely, the CBOEOEX Implied Volatility (INDEXCBOE:VXO) -- our mainstay fear proxy -- is basing above the 200-day, and that should be noted.
The Nasdaq 100 (INDEXNASDAQ:NDX) fulfilled our Head & Shoulder price target (that we penned on October 2) and closed last week directly on the 200-day moving average at NDX 2658. That, by my pen, was the sixth such time that the 200-day was tested and levels (both ways) get weaker with each subsequent probe
Remember the parallel we offered when we asserted Why Apple Is the Most Important Stock in the World? We would be wise to note that gravity has pulled Apple (NASDAQ:AAPL) below the 200-day at AAPL 590, and that remains a level to monitor as a forward tell. Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) remain other "performance anxiety" proxies (both ways).
Other tells include our financial proxies -- Goldman Sachs (NYSE:GS), Bank America (NYSE:BAC), JPMorgan (NYSE:JPM) -- as they encapsulate oh-so-much of our finance-based, derivative-laced global economy. Their overseas brethren -- Deutsche Bank (NYSE:DB), Barclays (NYSE:BCS) -- can be used to monitor European (Greece) concerns.
Thank you Team Minyanville -- staffers, professors, writers, behind-the-scenes workers -- for your incredible effort last week to ensure that Minyanville didn’t miss a beat despite the storm. I am extremely proud of everyone here who braved the elements and used their ingenuity to make sure we were operating tick-by-tick with the financial markets.
One month until Festivus! If you love live music -- three rock bands -- all-you-can-eat BBQ, top-shelf liquor, helping kids, and vibing with 500 folks that represent the finest human capital in finance and financial media, this has your name written all over it. We'll kick this year's event off by ringing the bell at the NYSE so please join us, and help spread the philanthropic word.
- Good luck today, and as always, I hope this finds you well, warm, and safe!
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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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