|Monday Morning Quarterback: Who Dat?!?|
By Todd Harrison FEB 08, 2010 9:45 AM
Do you believe in miracles?
Do you believe in miracles?
It was one for the ages; a come-from-behind victory that left the crowd stunned as time ran out. I’m not talking about the New Orleans Saints and their improbable NFL Championship -- although I well could be -- I’m talking about Friday’s late scoring drive as the bulls snatched victory away from the heavily favored Ursine Uglies.
We had the call on the Buzz & Banter, as we do each weekday. As discussed in real-time, I entered the session short, covered into the first dip (to watch the action), slapped on fresh downside exposure as we ticked near the flat-line and unwound that bet as the tape slipped to session lows. “Better lucky than smart” was the first thing I thought of as I watched the last hour Snapper, followed immediately by “It’s about time.”
To be sure, these aren’t easy times on Wall Street. With populous backlash at a fevered pitch and artificial influences at every turn, trading is a thankless, increasingly frustrating task these days. Toss in an unsure world from Eastern Europe to Asia and you’ve got a recipe for spicy cerebral jambalaya.
There are a few ways that we, as Minyans, can opt to cope with this.
We could hold a Spanish Inquisition.
We could take a road trip to see Fawn Liebowitz.
Or we could order three Orange Whips.
OR, if we so choose, we can fight the good fight with discipline over conviction, define our risk whenever possible and take our journey one step at a time. Hey, that’s better than the Ostrich Position!
All we can do is the best we can do and try to have few, if any, regrets when we get to where we wanna be. That goes for trading, but it also applies to life. For my part, following the 13-session 100-handle swoon in the S&P, I chose to cover my shorts into Friday’s crimson tide and enter the weekend with fewer elements competing for my attention.
Not everyone is that active and truth be told, I don't blame them! Fat, drunk and stupid is no way to go through life son, nor is stressed, tired and grumpy, as this business tends to make us. We often speak of social mood as a precursor to market moves. It's pretty sour out there, and for good reason; trying to "game" that angst can certainly wear on you.
The field position in the S&P remains a stair-step affair. Layered resistance will emerge from S&P 1080 to S&P 1105-1120. On the flip side, there is nascent support at S&P 1045, with more meaningful demand should emerge in and around S&P 1020-1025.
I still wanna trade from the short side (sell blips to buy dips) in the context of defined risk, with the conscious understanding that Boo may have to wait until Turnaround Tuesday to find his sweet pot of honey.
Minyan Mailbag: VXO (posted Friday afternoon on the Buzz)
It looks like full-blown panic now with VIX at 29. I can see VIX going to 30- 32 max; but frankly it is getting ridiculous. I am buying right here. Funny I remember when I was buying UUP at 22.6 in January no one wanted the dollar and the market was hitting highs day after day. Now everyone is a dollar bull, just as DXY and UUP look way overbought. Guess it's hard to be a contrarian!
Minyan Name Withheld
The "Crash" Index!
Panic? While it's scary out there—and the 100-handle decline has been thisquick—I most certainly wouldn't call this a panic.
Panic was in 1997 when I sold at-the-money straddles in the Morgan Stanley (MS) High Tech Index that expired in an hour for $9. The VIX was at 50, as it was during similar scares in 1998, 2001 and 2002. I traded through them all and can tell you that when the shvitz hit the fan, there was NO hope in the market. It's was Diaper City, USA, in each and every instance.
Click to enlarge
While that certainly doesn't mean we can't rebound—and we have since this email was received—we're a ways away from legitimate panic, in my humble view. In fact, when I walked into work this morning, I said to MV Editor Matt Theal that if this is indeed the next iteration of contagion, the VIX at 27 could be the steal of the year.