Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
A long, long time ago, I can still remember how that music used
to make me smile.
Yesterday, we asked a pretty straightforward question:
Will the S&P Breakout Matter?
Following a month-long technical tug-of-war, the bulls emerged
victorious, consistent with the standard that the larger the
pattern, the more likely it is to prevail. The uptrend has been in
place since last November and the downtrend since May 22; it was,
to carry the analogy, a
While I've been trading from the short side of late-shorting to
buy, rather than buying to sell-
I flipped my lid on Turnaround Tuesday
and got long, opting to carry that exposure overnight. It was a
bold move as those things go and one of the more difficult moves
for a trader to make. Alas, when the market opened higher
yesterday, I punted my directional
(NYSEARCA:SPY) exposure, carrying only single stock exposure
through the rally.
One of my favorite axioms is "never let an opinion get in the way
of making money." While I anticipated the breakout-
we flagged a pattern that "works" to S&P
-I don't particularly trust it. I'm unsure if this is a function of
my cognitive biases
, the catalyst today that could trump technical analysis (although
I believe Ben Bernanke walks the party line of status quo and data
dependent) or the deterioration of the integrity in the capital
market system, understanding that
social mood and risk appetites shape financial
That last point-the integrity of the markets-was brought to bear
yesterday when I
watched a CNBC segment
about black box trading being offered to the masses. Perhaps this
is an unavoidable evolution but it smacks of capitulation; the
human element is being driven from the market which, coupled with
the government hand, is making traditional analysis convoluted at
best and antiquated at worst.
Legendary investor Stan Druckenmiller
spoke to this point yesterday
. I don't have the stripes that Stan does, but I couldn't agree
with him more when he says, "price signals have been compromised,"
"the markets are rigged," and people "are chasing assets without
growth necessarily backing confidence."
These are not sour grapes from someone who has lost his way; it is
an honest assessment from one of the best risk managers in the
world, and he's not alone in his thinking. We've been talking about
financial leaders "going dark" for a long time;
this is nothing new to our readers,
and it continues to continue.
In the famous lyrics of Don Henley, "Who knows how long this will
last; now we've come so far, so fast." I am trading this market
with defined risk-reward when I see advantageous setups; it's a
style that has served me in good stead, in the instances when I
let an opinion get in the way of making money.
I will say this, however: I see a diminishing likelihood of this
ending well, at least in the traditional sense. The DNA of this
stock market is polluted and the human capital that will be
necessary to unbox Pandora is tossing towels left and right. When
the music stops, and it will, we'll see just how talented the
robots and black boxes are at finding their respective chairs.
- The first move after an FOMC announcement is typically the
wrong move. Add June expiry to the mix and you've got yourself a
recipe for volatility.
is a magnet, as far as open interest goes, but see the bullet
above before you sell that straddle.
Goldman Sachs Group Inc
(the commodity) were the flies in yesterday's upside try. $1325
is the level of lore for that latter matter, and it feels like it
wants to get there.
- Does anyone else think that
) should have issued a 10-1 split when the stock was up near
$700, instead of opting for the (almost) 2:1 organic split?
remains a huge level for both the bulls and bear. The bears will
lean against it on the short side, if it's recaptured; the bulls,
meanwhile, have it in their rear view for the first time in June
and they desperately want to keep it there, with hopes of
fulfilling the top-end of the still-in-place trend channel.
- I'm still there in
); again, not big, but directionally there, as the trend line
below continues to hold.
- Last night's Spurs-Heat game was one of the best games I've
The six-overtime Syracuse game
will forever be No. 1 in my book.
- Good luck today, and try to think positive; profitability