Global Market Trading Strategy

By Todd Harrison  MAY 09, 2012 10:55 AM

How I'm navigating the tape.



Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.

Greetings from a MUCH-better-feeling state of being after my doctors issued a clean bill of health. They told me that I should use my best judgment in terms of physical exersion in the next few days which I understood to mean that I'll be back at my turret tomorrow.  I already feel like a new man and a scare is sometimes needed for a fresh perspective; obstacles often provide the best opportunities.

In terms of the tape, I weighed in yesterday on the Buzz with this thought:

"First things first, I came within a point of being stopped out on a sizable S&P short position yesterday. As detailed in my opening missive yesterday -- and throughout the day on the Buzz -- I set a hard stop set above S&P 1375 (on exposure added at S&P 1400; and $44 in my Deutsche Bank (DB) short). Alas they didn't trigger and I entered today with a sizable short bet (among other things that aren't appropriate to share in this space).

"Two quick points as I'm now being pulled to the next doctor appointment. First, I keep hearing about 'all these loud bears' but many of the smarter folks I watch, listen to, read and follow on Twitter are unabashed bulls. It's anecdotal, I know, but worth a mention. The second point is that I've sold half of my S&P deeps (deep in the money puts) and doubled down (bought twice as much) out-of-the-money S&P puts. That gives me a bit more optionality, while allowing me to take some money off the table.

S&P 1340-1375 is the zone, and DAX 6500 continues to matters; my bias remains in tact until otherwise stopped out."

Fast-forward to this morning; my game plan in real-time:

I sold my remaining DEEPS (deep in the money S&P puts) into this morning's red mess largely due to the 2 x 1 put spread I traded yesterday, which effectively took another slug of cash off the table while (currently) holding the UNDERNEATHS (out of the money put options).  Both of these instruments are September paper and as it stands, I've not yet touched the Deutsche Bank (DB) puts that I bought two weeks ago (subject to change--and always updated first on our real-time Buzz & Banter; click here for a free two-week trial).

I fully expect S&P 1340 to act as support -- it's a biggie -- and should that level break, it will morph into newfound resistance. I am currently using S&P 1375 as my buy-stop although I'm openly wondering if I should shift that to 1375-1400 (given I've taken money off the table each of the last two days). And yes, I'm aware of the QE3 rumors, although I don't know how much bang is left in that buck.

Finally, if you're new to this stream of consciousness, please read Will Euro Elections Trigger the Next Phase of the Financial Crisis? and European Elections: The Morning After. To understand where we are, we must understand how we got here.

Good luck today and remember, if your P&L is your greatest concern, you should consider yourself lucky!


Twitter: @todd_harrison

Positions in SPX, DB

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

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