- Posted by DynamicHedge on December 7th, 2013 at 8:19 am
The trend remains intact, but pressing longs this late in the game is for true sportsman only. I tip my hat to the lion tamers out there.
Amazon tested a new advertising strategy over the long weekend (okay, not new). On the eve of cyber-Monday, they aired a story about potentially using drones to deliver packages. The combination of 60 Minutes’ demographic and the emotional valence of delivery-by-robot sparked one of the biggest free advertisements of the year. Drone debates lasted for days. Domino’s and plenty of scrappy startups have tried the drone meme. Amazon nailed it. Look for more smart companies to unveil “controversial plans” at opportune times. It works.
The consensus was that holiday shopping was light. Black Friday was supposedly lackluster, but it sure felt as if people were in the mood to spend. Personally, I was expecting a stronger showing. It will be interesting to see how the rest of the Christmas season turns out. The most recent Consumer Sentiment survey says that people are back to feeling good. Just not too good.
We mentioned that a market without a solid catalyst will eventually roam the ranges looking for liquidity. On Monday, the market failed to trade higher so the path of least resistance (looking for liquidity) was lower. This was day two of a five day march lower. On Wednesday and Thursday, sellers failed to make new swing lows, so the path of least resistance was higher. The VIX spiked and ranges widened out, making it very easy to get sucked in and whipsawed along the way.
Jobs and Taper
The employment report surprised by adding 203,000 jobs dropping the unemployment rate to a recovery low 7.0%. The report could not have thread the needle more perfectly. It was high enough to produce a sentiment boosting headline and low enough to stave off an undiscounted December taper. And we wonder why people love conspiracies.
Lackluster but still elevated. Breadth is not expanding to the upside but is holding in the upper end of the range. What is the bottom line? Fewer stocks are making new highs with the index, but many are still in their upper range (see below). Breadth is neither confirming underlying strength or flashing an imminent warning sign. This is one of those times when the deeper you read into the numbers and patterns the more dangerous it is.
Government dysfunction is still sighted as the leading risk factor for markets. But since when hasn’t it been?
My favorite quote this week comes from POLITICO’s Ben White and Darren Samuelsohn:
“Washington has tried very hard this year to crush the economy with debt ceiling fights, clumsy budget cuts, a government shutdown and complete legislative gridlock. It does not appear to be working…”
2014 will be a good year if this becomes a market meme.
Howard Marks: The Race is On
Posted by DynamicHedge on November 27th, 2013 at 12:50 pm
Howard Marks is out with a new letter to Oaktree clients. Over the years Mr. Marks memos have been an excellent source of market commentary, […]
New Signal in AMAZON Noise
Posted by DynamicHedge on November 26th, 2013 at 10:58 am
There is a company doing “in the nine figures” in business each year by extracting market research from Amazon reviews. In the world of winner-takes-all […]
Marketview: Momentum Continues
Posted by DynamicHedge on November 23rd, 2013 at 8:12 am
Trend Classic price action this week as the market sized up a big round number and then backed off only to make another run and […]
Marketview: A Quick Look at Trends
Posted by DynamicHedge on November 17th, 2013 at 1:07 pm
I was out of pocket most of the week travelling. I feel a bit behind the curve but does the narrative even matter anymore? My […]
Marketview: Bull Market Basking in the Sunlight
Posted by DynamicHedge on November 9th, 2013 at 7:13 pm
When bull markets start the fog of uncertainty is so thick you can barely see an inch in front of your face. As time […]
SPY Down 1%: Quantified Emotion
Posted by DynamicHedge on November 8th, 2013 at 12:14 am
After an incredibly weak market performance, it’s best to put emotions aside and look at the data. We pulled all the days in the last […]
Marketview: No Fun Market
Posted by DynamicHedge on November 3rd, 2013 at 3:51 pm
There’s a feeling floating around that while markets are up it doesn’t feel very fun. It’s very hard to get excited when the trend is […]
FOMC Meeting Announcement Precedents
Posted by DynamicHedge on October 30th, 2013 at 6:00 am
Today the Fed will announce to the world the overnight rate banks will pay each other for borrowing for reserves. Just kidding, everyone knows they’re […]
Breadth Participation by Market Cap
Posted by DynamicHedge on October 29th, 2013 at 6:00 am
Large cap and blue chips were instrumental in getting the market to all-time highs back in September. As the rally has extended, large cap stocks […]
DynamicHedge is an equities, futures and derivatives trader based on the West Coast. He runs a long/short opportunistic relative-value strategy within a proprietary trading group. More
- Marketview: Liquidity Needs
- Howard Marks: The Race is On
- New Signal in AMAZON Noise
- Marketview: Momentum Continues
- Marketview: A Quick Look at Trends
- Marketview: Bull Market Basking in the Sunlight
- SPY Down 1%: Quantified Emotion
- Marketview: No Fun Market
- FOMC Meeting Announcement Precedents
- Breadth Participation by Market Cap