Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
Looking out at the road rushing under my wheels; looking back
at the years gone by like so many summer fields.
While on the train into the city this morning for some early
segments on Yahoo! Finance, I discussed my upcoming segment on the
market with the producer. I suggested we call it, "Mission
Accomplished!" as there has been a Herculean effort to manipulate
prices higher since the depths of the financial crisis, and here we
are: all-time highs in the
Whether we dub it "The Federal Reserve's 'Mission Accomplished'
Moment" or "President Obama's 'Mission Accomplished' Moment" is a
moot point; the efforts have been intertwined and coordinated.
Against all odds, with the financial system teetering on the brink
of collapse, they manufactured a 160% rally in the S&P since
It's been relentless, it's been impressive, and for those seeking
historical precedent, it's been extremely frustrating.
With the DC drama behind us-for now-and earnings upon us, the
collective wisdom has embraced the notion that the path of least
resistance is due north into year-end. Most fund managers are
trailing their benchmark and can't afford to wait for a pullback,
or so the thinking goes. You can feel anxiety sweeping in the
streets; the question, of course, is whether it continues to
With 20% of the S&P having reported third quarter earnings, 55%
have beaten top-line estimates and 71% have beaten
earnings-per-share estimates. That's par for the course as these
things go, but it remains to be seen how much it will matter. Of
our four primary metrics, psychology remains the primary driver of
asset classes with structural influences (rates) a close second.
Fundamental data and technical analysis follow, playing the roles
There are two dynamics throwing caution to the wind; the first is
the long-term chart of the
(INDEXCBOE:VXO), which is edging toward massive support (this "fear
proxy" is a contra-tell for the market, rising when it falls and
vice versa). While it dribbled along these levels for years at a
time (2004-2006), it's worthy of a mention as we fit together the
pieces of the market puzzle.
The other caveat is the price action in select stocks-
-which have enjoyed a parabolic frolic, raising the question of
whether they've entered the "panic"
phase of our psychological continuum
(denial, migration, panic).
And of course, there's the perception that corporate America has a
mulligan on fourth quarter earnings following the government
shutdown. In short, with the downside rationalized and the upside
all but expected, we must ascertain if the easy trade is a bit too
One thing for sure, we'll have plenty of data to digest this week,
including earnings from Netflix,
(AMZN). We'll also have the EU summit starting on Thursday as it
looks to strengthen policy coordination and increase regulatory
Watch the banks, breadth, high-beta, and S&P 1730ish (previous
breakout) as we together find our way.
And good luck out there-we do indeed live in interesting times.