Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
It's a cold, dark, dreary Monday in the big city, but you couldn't
tell by looking at the stock market.
News that Larry Summers has withdrawn his name for consideration as
the Chairman of the Federal Reserve has markets feeling groovy the
world over. He was more hawkish than some of the other potential
nominees, although it's tough to argue that markets were
discounting his appointment given the September price action.
While Wall Street is no fan of Summers, his appointment-or at the
very least, his nomination-was viewed as a near certainty,
according to high-placed sources (which is further confirmed by the
initial kneejerk higher in equity prices). Of course, we'll get
further information from the Fed this week when it announces its
"rate decision," and speculation is rampant about whether it will
taper, and how much.
The bulls continue to view the taper decision as "heads I win,
tails you lose"; the FOMC will only taper if the economy is
improving, or so the thinking goes, and will remain accomodative
until it does. This assumes past performance (liquidity-fueled
gains) is a guarantor of future returns, but it has earned the
benefit of the collective doubt given the stock market action in
the five years since Lehman Brothers fell.
While we can point to numerous issues -
the transparency of Level III (off-balance sheet)
, the lack of regulation in the OTC derivative market, the
interdependency and interconnectedness of the global machination,
sovereign debt levels relative to GDP - those concerns are akin to
Chicken Little as long as the screens are green. Financial players
are notoriously shortsighted when it comes to the risk of rewards,
and with the
Dow Jones Industrial Average
(INDEXSP:.INX) 20% higher on the aggregate, performance anxiety is
good and thick.
In the here and now, traders are looking at the potential
cup-and-handle formation in the S&P, per the chart below, which
requires a breakout through recent (all-time) highs to trigger.
While this week started on a strong note, there is a slew of news
left to digest in this five-session stretch, so be sure to manage
risk rather than chase reward as we together find our way.
The Gold vs. S&P chart is cause for
) continues to be a battleground; I have no horse in that race
although $360 continues to
vibrate in my mind's eye.
- If you were to tell me that my Raiders would have a better
record than the New York Giants at any point this season, I
wouldn't have believed it.
- White light to those impacted in the Washington Navy Yard
shootings this morning.
And so it continues.
- Tech stocks are lagging today (S's over N's).
(INDEXNASDAQ:NDX) 3150 will be the first level of support; we
should learn a lot just by watching.