Positioning in Front of the ECB Meeting

By Todd Harrison  MAY 05, 2010 11:45 AM

The scary aspect of the European Disunion is that it's but one of many potential pitfalls.

 


Yesterday, with the DJIA down 264 and the S's off 32 and change, I took one arm out of my metaphorical bear costume, which was added Monday at S&P 1200, leaving one arm (25% conviction, for a trade). The intuitive price target, as a first stop, was S&P 1150.

Yesterday's Cliff Branch, it turned out, was the 50-day moving average at S&P 1169. That's where Hoofy made a stand and he held the line for the remainder of Turnaround Tuesday.

This morning, we've chewed through that level as 1) Moody's put Portugal's government bond rating on review for a possible downgrade, 2) the dollar continues to Oxycute carry-traders (breaking out, get it?), and 3) traders, loaded to the gills after an incessant run, turned tail on a technical basis (such as the iShares MSCI Emerging Markets Index (EEM), which violated the uptrend and the 200-day moving average).

I've made no bones about my deep-rooted big picture concerns. The scary aspect of the European Disunion is that it's but one of many potential pitfalls. States are in a scary, uh, state, pension problems abound, social mood is shifting (note the unrest in Greece, which turned violent, leaving three dead), and the "buy the dip" shtick is still good and thick, begging the question of where we are on the denial-migration-panic continuum.



With that said and respected, my metaphorical costumes are pure trades and trades are made to be taken. I eyed S&P 1150 on Monday at 3:30 PM when the S&P was at 1200. While I continue to trade around a gamma position, I humbly removed my other arm from the bear suit, in real-time on the Buzz & Banter, shortly after the opening bell as we edged towards that level. That’s 4% in 7ish hours -- better lucky than smart indeed.

Remember Minyans, there's an ECB meeting tomorrow. While nobody is bigger than the market, something one of our Uncle's will eventually learn, a cornered animal will do anything to survive. That too should sound somewhat familiar.

Please keep that in the back of your crowded keppe as we hike up the hump and find our way to better days.

Random Thoughts
 


R.P.

Position in S&P

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

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