The Minyanville Market Overview

By Todd Harrison  SEP 21, 2012 5:20 PM

Hoofy and Boo hold clues for you!



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

Hoofy just ran into the room goin' nuts. "I'm so freaking bullish!" he exclaimed, "Lemme show you two charts." I sat back in my chair; I had seen this before.

Boo limped in behind him; he looked like he hadn't showered in weeks. His breath smelled. It was ugly.

The charts our bull was pointing to are below. The first is a long-term trendline for the last three years.  Without discussing the "why," look at the "what."  It's perfect.

The second is a 30-day daily chart of the S&P (INDEXSP:.INX); the "previous highs" on the left are four-year highs. Take a picture -- it's gorgeous!

In short, the bulls own the technical metric.  Psychology is chasing the market higher fueled by performance anxiety (never underestimate the mindset of a fund manager fighting for his livelihood in today's shark-infested waters). That sword swings both ways however; the buyers are higher and the sellers are lower.

Market fundamentals? You can make a case both ways, both peering back and looking ahead. There's manufacturing and transportation (note the FUGLY action in that traditionally leading sector) and there's the digital economy driven by the cult of Apple (NASDAQ:AAPL) (when does that mood turn?), Linked-In (NYSE:LNKD) (expensive but a monster), Amazon (NASDAQ:AMZN) (a cloud play), and Google (NASDAQ:GOOG).

THE metric that matters is the structural situation. It's big, binary, fragile, and fearful.

Global central banks are "ALL IN!" in an effort to save our very sick system, and we’re dancing on the head of a pin.  As the tape trades higher social mood continues to sour and the two are twain to meet. This will continue until the debt disappears—it will take years—or something will pop before it does.  You don't have to like it, you just have to respect it.

This monster will consume you if you let it—I have, and it does—and I'm as financially fatigued as I'm sure you are.  These are historic times, and it’s not the depth of whatever this is that matters, it's the length. It'll wear you down boy; right down to the ground.

I'm still holding QQQ (NASDAQ:QQQ) October 70 puts, which makes the most recent sideways grind action the financial equivalent of a kick to the groin.  Drip, drip, drip says the theta, 24 hours a day, seven days a week.  The sound of water dripping in an empty bucket seems to follow me around wherever I go.

I'm down a grand total of $0.45—I entered with a $1 stop—but the position feels very wrong (which means I’m too big or we’re going lower).  Did I mention that you should always factor in timing when you trade options?  Yep—I knew that.


Twitter: @todd_harrison

Position in QQQ