Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
Following a string of losses in the stock market-begrudging losses,
but losses nonetheless-the tape grinded higher yesterday to finish
in the green, holding the 38.2% Fibonacci retracement in the
(INDEXSP:.INX) on the close. That was a victory for the bulls, but
one that was short-lived, as evidenced by the price action this
The looming concerns continue to emanate from Washington, DC, as
the political infighting persists. Conventional wisdom dictates
that calmer heads will prevail-and they most likely will, at some
point. The caveat is a market that is priced pretty close to
perfection near all-time highs, and
a US government shutdown could shave fourth-quarter economic growth
by 1.4%, depending on its length.
Last Friday, into the teeth of the "no-taper euphoria,"
we cautioned investors
that the two previous "breakouts" to all-time highs were met with
immediate selling, resulting in declines of 8% and 5%,
respectively. That seemed like a throwaway thought at the time
the Circle Smirk at the Federal Reserve
but it's worth a mention as we meander 2.5% lower week over week.
Alas, it's Friday and you know what that means: We're a few
precious hours from our requisite respite and pigskin galore. As
such, I humbly offer the follow Random Thoughts as we edge toward
the weekend, in no particular order:
- It's a market of stocks, not a stock market, and there has
been plenty of movement under the hood.
) stand out on the downside, while
) have partied like its 1999.
- I remember the persistent push higher into Y2K
when I thought
"This isn't going to end well." Tech stocks lifted more than I
would have thought but sure enough, they spilled with equal
- I then thought about the historic "buying stampede"
we chronicled throughout 2013
and wondered if the "other side" of that trade is in the wings.
Few foresee it, which in a way increases the likelihood that it
- The banks have been the quiet storm of late, underperforming
the broader tape. As go the piggies, so goes the poke, per the
chart below of the
S&P vs. BKX
(INDEXDJX:.BKX). For the latter matter, BKX 62 is the August low
and should be monitored.
- As long as we're talking correlation, I'll add the
S&P vs. gold
, charted from the beginning of 2009 when the rising tide of
liquidity lifted all boats.
Uno mas, por favor
: a bubble comparison chart with the
(circa Y2K), crude, China,
(TSLA). t's not "scientific," but it does speak to the emotion
and psychology in play.
is the 50-day moving average support;
is the 200-day support, if and when.
- While the tape has climbed a wall of worry for some time, it
remains to be seen if it can lift into the weekend with a
government shutdown looming. The bulls will argue it's a matter
of time before we see a "Syria-type" ramp up on resolution but
the timing of said resolution is unknown.
- What we know is that performance anxiety is particularly
ripe; the lesser-known story is that the recent rise in the
discount rate has lowered pension fund liabilities, bringing them
closer to being funded (reducing equity risk appetites on the
aggregate). Maybe that matters, maybe it doesn't-greed and fear
are the drivers-but we strive to see all sides, and now we do.
- Good luck, and enjoy the weekend-you've earned it!
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