Temper Tantrum No. 3..or is it No. 4?

Equities start the day higher as the baby finally goes to sleep. It’s been awhile since I had a newborn, 8 years to be precise, and while there are many things I miss about creating a new life, the little rascal crying is dead last on that list. Oh it's 2:45am and you want to eat? Great, how about a pop tart so I can go back to bed. The market spent most of last week crying and wailing and gnashing its teeth because the Fed might go from 0.50% to 0.75% in Fed Funds. Last week was basically Taper Tantrum ver 3 (maybe version 4 or 5, we have these a lot now) as expectations around Central Bank action went from “they are 100% hiking on Wednesday” to “maybe it’s like 75%” before finally ending on “it’s like 15%, why are we over reacting”. From a price action perspective you have to love the fact that we re-tested the 2,135 area, spent some time below it, and then put it once again in the rear view mirror. That area should represent significant support going forward and a clean break below it would be extremely troublesome. So what’s on tap this week, what should we be looking forward to? The Fed meets on Wednesday and I think they punt to December. Why hike a few months before an election when the data is still somewhat mixed? The Bears play Philly tonight and I guarantee they lose. Ugh the Bears, why hast thou forsaken me? Must I put all my faith in a baseball team that hasn’t won since the airplane was invented? Anyway, let’s see what happened on this fine Monday in fall.

After the open our baby must have had a bad serving of liquefied peas because we traded lower all the way thru lunch. Why? Well my friends, no reason I could find. Richard Fisher made a few comments but he isn’t even a Fed Governor anymore. The NAHB housing index beat expectations so it wasn’t about homes. Maybe the market just wants to tread water until Yellen and her posse make a decision? I guess that’s it for lack of a better reason. Hey REITs have their own GIC code finally, I guess that happens when you get nonstop inflows since 2010! Did you know this is the first reconstitution of the S&P since 1999 when Tech got its own independent sector? Crazy. GPRO gained 2.5% today after introducing the Karma drone. For $799 you too can take videos of your kids crashing down ski slopes that you paid $150 per person to be on. Oh and lunch is going to cost you $75. USA USA USA. What else? SRPT nearly doubled after getting U.S. approval for its drug to treat muscular dystrophy (our analyst Skorney Outperform on it) and BLOX rose 15% after agreeing to be acquired by private equity. Speakikng of blox, did anyone eat “knox blox” as a kid? Where did that term come from? Why weren’t they just called “jello blocks”? Losers were CHK, SRCL, WYNN, and MU.

We got a small rally in the afternoon but it didn’t amount to a hill of beans and by the time the bell rang we landed on 2,139, exactly unchanged. UNCHANGED… I appear to have a KNACK for writing when the market doesn’t move. I need to start writing more so I can capture these 1-2% moves in vivid Technicolor. Now before you move on, please read this fantastic article from Bloomberg because it hits on a lot of the views I currently hold. Here’s the teaser quote: “For all the talk of bubbles and markets inflated by easy money, investors show few signs of euphoria -- a posture that analysts say explains the shallowness of the last few selloffs”. That’s right, euphoria is in scarce supply right now.  

Final Score: Dow flat, S&P500 flat, Nasdaq -18bps, Rus2k +63bps.

Volume was below avg. Our desk was better to buy. Buying in Semis, Tech, and REITs. Selling in Drugs and Industrials. Shorting in Retail. 

News Highlights:

Tonight we are going to end with the best ping pong video this side of Forrest Gump. Gotta check this one out people, the tricks are real.


Have a good night.