Gene Inger's Daily Briefing (highlights)- for Tues., February 19, 2013
(Courtesy weekend highlights. Please join us daily by subscribing at www.ingerletter.com)Artificial 'pump priming' - wasn't even needed for the latest late rescue on Friday. Contrary to some arguing about expanding multiples amid good times (a ruse if not outright distortion of realities, for a broad swath of our society), it was simply a late short-squeeze that saved the day one more time.
(S&P candlestick chart with expectations reserved for members. Also Tues. we'll explore implications of the Philly Fed and what that also signals; plus a word or two showing how despite the high prices for bonds; the safety profile and drawdown risk play a role in the credit vs. equity investment story now.)
The nominal Expiration contributed to that; and a desire to be 'flat' over what is a long weekend. It could have faded; but the Expiration combined with the sharp sell-off (we were positioned nicely short for it with intraday guidelines by the way) were sufficient to get people short into weakness, which set-up a late comeback. No surprise; covered this in commentary because of failure to take-out the prior intraweek low. But the short from S&P 1520+ did quite well.
As to the new week; don't forget that we suspected upside ahead of nominal Expiration; holding things together. Fine. Now with a 4-day shorter week; we might well get (redacted), but not necessarily sustain it to the weekend.
Whether it's the G20's failure to break-up concerns of a 'currency war'; reality striking via the internal WalMart memo (interesting to hear even that argued against by pundits), as to how soft (worst in years) the month has been; or of course the mixed news on housing and higher gasoline; there is little doubt all talk of higher 'consumer discretionary spending' is wishful thinking for now.
Nevertheless, the 'bad news is good news' theme keeps the bulls festering on the upside, while distribution occurs in the majority of sectors; and optimists ignore even Fed members cautioning about the limits on further stimulus or the benefits of the money printing diminishing on each successive round.
Not to mention Sequestration; as kicks-in in ten days; and likely does given the 'recess' Congress 'awarded' itself for all of the coming week. This is not a boost to the economy; necessary or not; so it's hard to fathom how analysts can speak of significant growth and multiple expansion in the face of all this.
Actually the case for higher equity prices (reserved for our members); so if those are attained, one can be just a bit more, perhaps a lot more, optimistic about additional equity gains. (Then; not necessarily now.)
Daily action - maintains a breakeven essentially on the 1521 E-Mini March S&P short guideline; described as a 'posture' primarily because (redacted).
We would expect that fight to (sorry; unfair to subscribers to discuss further). We do not see M&A activity, or (similarly this is too analytical to share here).
That is why we have shorted the upside spikes; and almost every time been successful at it in hit-and-run style; or at least not overnight. Our posture or position short guidelines simply emphasize that we're due for (redacted).
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