Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
With the government shutdown looming, the
(INDEXSP:.INX) entered this week precariously perched on the 50-day
moving average; it was sort of a big deal as it was the first of a
few levels of layered support that include
(the 11-month old uptrend) and
Given how long it's been since we had a (gasp!) 10% correction --
the economy being so strong and such -- the stars were
for the bears to stair-step lower.
Of course they were.
On cue, and consistent with the path of maximum frustration, the
tape rallied higher, due in equal parts to short covering,
Crash the Cat's Fifth Birthday
(who got a bowl full of fresh turkey last night as a consolation
prize). Say what you will about what happened and why, the
(INDEXRUSSELL:RUT) notched a fresh all-time high into the close.
Take that, Karl Marx.
Turnabout is fair play -- there are always two sides to every trade
-- so we shouldn't be surprised to see the S&P lower this
morning, wiping out yesterday's gains and again testing the 50-day
moving average. Technical levels weaken with each retest (as supply
or demand is absorbed on each subsequent probe), so the odds of a
break this time are incrementally higher than they were yesterday.
Now to the issue at hand: We don't "do" politics at Minyanville
unless it impacts the price action of the marketplace, or at least
that's the goal, allowing for some butterflies to sometimes slip
through the net. As a registered independent -- fiscally
conservative and socially liberal, a posture seemingly shared by
more and more folks these days -- I'm as equally saddened and
frustrated by the political infighting. But I am not, in any way,
shape, or form, surprised.
We've been fingering the "other side" of policy
for many years
the "tricky trifecta"
of societal acrimony, social unrest, and geopolitical conflict that
has permeated our lifestyle,
widened the income gap
, and poisoned our culture. Many will argue that our view has been
rendered inconsequential due to the steady ascent of stock prices,
although I would argue that the causes and effects have been, and
will continue to be
The venom between the Blue and the Red is a natural extension of
what many of us have felt for a long time; while the stock market
reflects the best economic prospects of
, the underlying condition has been deteriorating at its core, at
least for the majority of people. Once upon a time it was masked by
the lower dollar and skewed by the spending habits of a slimming
margin of society. Now, it's a one-trick pony, rewarding the
"haves" and sweeping over everyone else, a modern-day "let them eat
I'm not on some high horse; this isn't "fun" to talk about nor is
it particularly popular, but the discussion must take place if
we're to arrive at a solution. We've long offered that the
unfortunate but unavoidable solution is to raise taxes (be it sugar
tax, the legalization and taxation of marijuana, marginal increases
for the wealthy)
cut spending. That is fiscal responsibility at its core, and given
the size of the hole we've dug through the many years of societal
largesse, we need to be lucid and honest about what needs to be
done to fix it; if not for us, than for our children and perhaps
Unfortunately, while the social mood climate is in many ways
rational (people are angry and rightfully so), the manifestation is
acutely dangerous. If policymakers and politicians don't get their
acts together and stories straight -- and quickly -- the budget
impasse will bleed into a debt-ceiling debacle and fuel the fire of
foreign holders of dollar-denominated assets and debt. Remember,
the world blames the US for the first phase of the financial crisis
and they already have their finger wagging in this direction. That
smacks of a multitude of unintended consequences through political,
financial, and social lenses.
What can we do?
As people, we can maintain level heads, teach our children the
difference between right and wrong and the value of a dollar, and
strive to be part of the solution when everything around us screams
"take care of ourselves."
As traders, we should manage risk rather than chase reward, lean
against our levels, and remove emotion from what promises to be a
very emotional year-end stretch.
As investors, we should understand that we're already five years
and 150% into this "recovery," and while it can conceivably
continue, we would be wise to remember the persistent pattern of
savers being screwed at bottoms and investors being punished at
For, as Mark Twain famously said, "History doesn't always repeat,
but it often rhymes."
- This is my fifth week on my self-imposed no-booze kick (sans
a glass of wine or two on occasion). This very well might morph
into a lifestyle decision as the benefits of not drinking
seemingly outweigh the benefits of drinking.
- For the record, I was kidding when I mused on Monday that
given how dysfunctional the government is, a shutdown would be
viewed as a net positive.
- Eleven years of real-time writing in the 'Ville;
we sure have gone through a lot together,
is smelting and I've attached two charts; the first is the
correlation between gold and the S&P and the second is an
emerging head & shoulders pattern. If gold breaks $1,275, it
"works" to $1,115 in a technical vacuum, which happens to be in
and around the June low.
- The best part about being A.D.D is that I can watch
again and it's all new to me!
) $50, and
) remain my primary proxies in the banking complex while
(the August low) is the technical toggle.
- Did you see
this take from Slate
on how the US would report on the US if it weren't the US?
- Where will
) be trading a year from now --
does anyone have any
- Have the bears been completely discredited yet?