Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
Well I'm learning to fly, but I ain't got wings; coming down is
the hardest thing...
-- Tom Petty
It's been a bipolar stroller on Wall Street; following last week's
Oh No You Didt!"
decision not to taper by the Federal Reserve, the knee-jerk rally
to all-time highs quickly gave back all the gains and then some.
The question is begged: Was it a healthy "back and fill" or one of
the more vicious head-fakes in recent memory?
In the A.D.D. immediate-gratification stock market, the next
catalyst is always right around the corner and the next bogie is
the specter of bipartisan bickering and a potential government
shutdown. The last time the president and Congress crossed swords
over the debt ceiling in 2011, the
(INDEXSP:.INX) fell 17% between July 22 (when talks fell apart) and
August 8 (after the US credit rating was downgraded).
Will history repeat or perhaps rhyme? Time will tell, but it's
worth noting that much of the buying the last few weeks was short
covering, which removes a forward layer of demand. Indeed, this
market is setting up for a pretty significant showdown into
year-end, with performance anxiety-ridden fund managers on one side
(ready to chase the tape higher) and late-to-the-party bulls (and
their attendant pain tolerance) on the other.
Some Random Thoughts as we together find our way:
- The financials led the tape lower yesterday and remain on our
(INDEXDJX:BKX) 62 is the August low for that complex, so keep
that in mind (the 200-day is down at
which "breaks" under $50
- are the individual stock tells.
- Through a broader lens,
(the pre-FOMC no-taper rally level) is the initial resistance
is a nice round psychological level of note, and
(the uptrend from November) is support below, if and when.
- Lest you were confused by the latest mixed signals from the
Federal Reserve, yesterday's banter by Fed heads cleared up any
confusion (or not). Richard Fisher opined that the decision (not
to taper) undermined the Fed's credibility (
) and the "To Big To Fail" banks are a "dagger pointed" at the
economy's heart (
), while Dennis Lockhart and William Dudley took the other side
of that trade.
- We always ask the "why" surrounding the "what" around here;
while Big Ben specifically mentioned the potential for a
government shutdown when he communicated his/their decision not
to taper (asset purchases), I'm curious how effective that $40
billion/month will be if in fact the government takes its ball
and goes home.
- I, for one, miss free market meritocracy but I'm seemingly
screaming into the Grand Canyon; we have to trade the market we
have, not the one we want.
- Tough loss for the Raider Nation last night but boy do the
Donkeys look good this year; the better team won.
- I've updated the gold vs. S&P chart below so it's front
and center; things that make you go