Financial TV, Target (Not) In Canada, NFL Odds, and More

Why 'news' impacts the market as much as the Oscar nominations, and other random thoughts

Jan 16, 2015 at 9:11 AM
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Anyone mentally exhausted from this week's market action? We all complain when volatility looks like wallpaper, but hey, I miss those days! More fun to watch stocks grind up then crumble down.

Anyway, some random Friday thoughts:

  1. When the market gets more volatile, I tend to keep the financial TV on longer. I also have the urge to bang my head against a wall more frequently. Causality? Probably, yes. That's mainly because they drive me nuts with their own brand of causality. Does some intern get assigned to go look at a newswire when the market makes a move and then officially assign that news to the move? And then put it on the teleprompter so it gets repeated as gospel all day? It doesn't serve anyone well to simplify the market like that. We're in a downtrend until we're not. Any backward-looking number or random news blip is best viewed as coincidental. It has barely more impact on a market blip than the Oscar nominations. We'll bottom someday and it will coincide with some story and the two will forever get linked. But it's more about just the selling pressure getting exhausted than anything else.

  2. I tend to view rising volatility as a bad thing (to fade) when it doesn't hit extremes. But does that describe what we've seen in 2015? I'm not sure. We've had both slow grinds higher (bearish, in my opinion) and extremes (bullish, in my opinion). That's the oddity of seeing an overbought CBOE Volatility Index (VIX) every few weeks -- we're kind of in a netherworld here. We're crying out for one of those days where you wake up and see the futures down 30 handles and then reversing big time.

  3. Options-based funds are multiplying in number. Good thing or bad thing? Theoretically, it adds leverage, which adds volatility when said leverage turns into a bad thing. For now, the numbers look very good.

  4. Worried about Target Corporation's (NYSE:TGT) numbers this quarter? Blame Canada. Target did.

  5. I don't see much edge in either NFL playoff game this weekend. I'd show the Seahawks worth about 5 points over the Packers, with an over/under of 50.2, but that doesn't adjust for Aaron Rodgers' calf injury. The actual market shows Seahawks either -7 with higher juice or -7.5 with low juice (it's about the same -- so call it Seahawks -7.25) and a total of 46.5. So, if I dock the Packers a few for the injury, it comes out almost spot on. Madden thinks the Packers play them even, but again, that's presumably not programmed to slow Rodgers down.

  6. I show the Patriots worth -5 over the Colts, vs. a market of -6.5 or -7. But the Belichick/Brady combo throws off my numbers. Seriously, long story short, add a couple of points to the Pats' "value" every game. What's funny is that I show the Colts as a value-add team too: Pagano/Luck actually add more value per season than Belichick/Brady, it's just that it's only three seasons' worth of numbers, so tough to know the statistical significance. I have the total worth 51.7 vs. 53.5, respectively, for real. Madden thinks the spread is right in line, but likes the Under.

  7. And hey, here are the hypothetical Super Bowl lines from (think when-issued stock trading):
Current Super Bowl spreads

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.



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