"Natural ability is important, but you can go far without it if you have the focus, drive, desire and positive attitude." -- Kirsten Sweetland, triathlete

SNAP, Crackle & Pop?

It has been a good while since the market has seen an initial public offering (IPO) gain as much publicity as Snap SNAP. The shares were priced last night at $17, above the $14 to $16 range that the firm was looking for. Though the pricing does indicate healthy enough demand, the shares come with no voting rights. This deal raises $3.4 billion and will bring SNAP's market cap to $19.7 billion. Goldman Sachs will be the lead banker on the NYSE trading floor. This data is all interesting, but I understand what you are looking for: all you want to know is if you should get involved in the secondary market.

I don't use Snapchat. That's not my generation. That certainly does not mean that there is not money to be made here. I have no doubt that there is a market for disappearing messages, and fun style picture taking. I would think that these type services could easily be duplicated by existing, more established social media firms. Kids may prefer the service, but will they, can they, spend? The non-voting shares do bother me a bit. Not that I ever actually send in my proxies, but don't tell me that I cannot. You came to market looking for funding. I buy an equity stake in your business? Then I have a proportionate say in that business. For me, that is a major negative. I find it even more insulting when the firm is yet to illustrate to me its ability to get out there and make some dough.

There will likely be early demand for the shares. After the open, there could be a surge from those shut out of the IPO, but after that, it's just speculation. On Twitter's (TWTR) first day of trading, I tried to pay $30 after the shares had been priced at $26. I wasn't even close, and refused to chase. Eventually, I paid less than half of that price for the shares that I wanted, and for some bizarre reason I still own them. The point is that there is a price that I am willing to speculate on SNAP. There's always a price. I'm just a lot more likely to take a chance at my price, definitely not theirs. SNAP? Only at a significant discount for me.

Details, Details

Now, that's a rally. Yesterday, just in case you are out on vacation or something, the S&P 500 ran a face-ripping 1.4%, with eight of its 11 sectors gaining more than 1%, and two (financials and energy) screaming to gains of more than 2%. Will there be some profit taking in the wake of such a day? Sure there will be some. Some traders will adjust their positional targets. Some will stand by well-worn disciplines, and the algorithms do what they're programmed to do, without emotion. Still, the case is there for higher equity prices. If your management style is not one of the high-touch variety, I can't tell you what to do. I can tell you that I will remain net long.

I have told you several times that my 2017 target for the S&P 500 was 2465. That target started out as well above consensus, but is rapidly getting closer to the middle as the rest of Wall Street catches up. So nice to be independent, and able to speak one's mind. I may be wrong. Hey, I may be low. You never know. Never. That's why they call it risk management.

What we do know is that we suddenly have a warm and fuzzy version of our president who has refused to be nailed down on detail. Much of the Street, or at least the financial media, scoffed at the lack of detail. Either they have no skin in the game, or they simply don't understand how the game is played. A highly defined level of detail in Tuesday night's speech would not have pushed out the bull like the group hug session that we did get. Understand? It's all about optimism. Almost the entire economic agenda remains to be hammered out in the future. Are you going to cash out well in front of that? Probably not in any size. At least one is not very likely to get net short and stay that way if the worm turns against you. Right? That worm can really wiggle, now, can't it? Oh, no doubt that there is a very bad day out there somewhere, and it's hunting us down. Nothing new. It's always out there. Always hunting. Accept it, and trade around it. Afraid? Every day.

When Doves Cry

Surprise, surprise, surprise ... Lael Brainard has turned hawkish. Last night, the Fed governor, known prior to November's election as the Federal Reserve's most ardent dove (even more so than Chicago's Charles Evans) made some statements that an old Von Mises guy could get fired up about. Really. From Cambridge, Massachusetts, Brainard said: "Assuming continued progress, it will likely be appropriate soon to remove additional accommodation". Brainard also mentioned the balance sheet, and her preference that said balance sheet not be used as a tool for shaping the U.S. economy. Janet Yellen did not even go there. Me, agree with Lael Brainard? I guess crazier things have happened. Later in her speech, she did go off of the rails a little while mentioning the U.S. economy's progress toward full employment. Plenty of academics actually believe that, so she is not alone in that thought. Most of them simply fail to understand the supply side of the labor market. While we do have a way to go prior to approaching full employment, the ball is rolling the right way.

Macro

08:30 - Initial Jobless Claims (Weekly): Expecting 243,000, Last Week 244,000. The entire range of expectations for this item today runs from 240,000 to 250,000, so nobody is too far from consensus. The four-week moving average now stands at 241,000, which is how economists look at this item. Traders largely have ignored this item since it became very regular about two years ago.

10:30 - Natural Gas Inventories (Weekly): Expecting -49 billion, Last Week -89 billion cubic feet. Natural gas inventories have printed in contraction for fourteen consecutive months. We know that the total of gas producing rigs in operation has started to tail off. We also know that the weather has been very warm for much of the country of late. For those reasons, I have seen two sources that have either predicted a flat inventory count this week from last, or very close to it. Don't be overly surprised if the streak ends today.

19:00 - Fed Speaker: Cleveland Fed Pres. Loretta Mester will speak from New York City on leadership. Mester is a well-known hawk, but does not have FOMC voting rights this year. There will be questions posed from the audience afterward.

Sarge's Trading Levels

These are my levels to watch today for where I think that the S&P 500, and the Russell 2000 might either pause or turn.

SPX: 2414, 2404, 2398, 2392, 2381, 2375
RUT: 1429, 1422, 1414, 1404, 1396, 1390

Thursday's Earnings Highlights (Consensus EPS Expectations)

Before the Open: (ANF) ($0.77), (BUD) ($1.03), (BKS) ($1.17), (KR) ($0.52), (SHLD) (-$2.85), TD ($1.27)

After the Close: (COO) ($1.88), (COST) ($1.36), (WING) ($0.14)

At the time of publication, Stephen Guilfoyle was long TWTR, although positions may change at any time.

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