The March Madness Song and Dance
Let the games begin!
And you thought Donna Summer was out of season.
On Friday, we chewed through Boo's last dance, last chance for love. With recent highs upon us, we offered that the bears had an opportunity to prosper if they could hold the tape under resistance at S&P 1380 and NDX 2650.
That would form the dreaded double-double top (not to be confused with a Double-Double Animal Style) and barring a Pop (through those levels) and Drop (after buy-stops were triggered)—which might be the path of maximum frustration—this setup provides nice and tight defined risk for those with a downside directional bias (conversely, if the bulls bust through to the upside, past resistance will morph into future support).
With March Expiration this Friday, we would be wise to remember that expiration influences tend to manifest (through an uptick in volatility) in the days prior to the actual expiry. That, coupled with the price action in the metals (commodity volatility typically precedes equity movement) warrant a nose-scrunch as we fit together the pieces of our ever-changing puzzle. Gold $1,680, the 200-day moving average, should remain on ye radar even if you're not trading the yellow metal.
Early market futures are blinking pink—as is Europe—as we ready to fire up for our five-session set. I would also like to wish ye faithful the best of luck as we ready for March Madness. I have mixed feelings about the Syracuse road map—I’m psyched Mizzou and Baylor are in other regions (they scare me) but nervous about Vandy and OSU, particularly as our seniors struggle—but as with the market, and for that matter life, we'll take the tourney one step at a time. Click here for more info.
- The most interesting action on Friday was the dollar, which is up almost a full percent.
- I was pleased to see the ISDA rule that Greece was in fact a credit event as it spoke to their relative credibility in an age when that has become a commodity (along with “truth” and “trust”). And we know that credit of a different breed—that of credibility—has been the issue at hand for markets at large).
- The trillion-dollar question, quite literally, has now morphed into whether this will be an orderly or disorderly default (rife with counter-party contagion) and unfortunately, we won’t know that answer without the benefit of hindsight.
- Some will argue that clarity, or the perception thereof, coupled with liquidity and sprinkled with performance anxiety is the bull case in the forward equation. We must always see both sides as we collectively attempt to map an advantageous risk-reward dynamic.
- I’ve maintained for the last few years that we’ve seen drugs that mask the symptoms (synthetic stimulus) rather than medicine that cures the disease (debt destruction and/or reorganization). Now that we’ve seen the latter matter, we must extrapolate whether that will provide a future road map or if that was a “one and done” solution, as policymakers suggest.
- Deutsche Bank (DB) and Barclays (BCS) have been heavy of late, and they remain our best overseas bank proxies. Goldman Sachs (GS) and Morgan Stanley (MS) are the stateside tells and BKX 45 remains an important level for the stateside financials. Quite obviously and still, Apple (AAPL) is the single most important stock for the four-letter freaks, if not the freak at large.
- As always, I—and over 30 other sharp cookies—will offer our best real-time vibes on the Buzz & Banter. Click here if you want a free two-week trial and thanks, as always for your continued support.
- Have a great week!
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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 email@example.com.
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