Random Thoughts: Anatomy of a Rally

By Todd Harrison  NOV 19, 2012 10:37 AM

The bulls make their final stand of 2012.



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

On Friday, I scribed the following vibe on our real-time Buzz & Banter:

"Yesterday, I shared that the combination of 1) BKX (INDEXDJX:BKX) 47 (the 200-day moving average, drawn with a crayon), 2) the S&P (INDEXSP:.INX) trend-line (since the summer of 2011) and 3) the defined risk inherent in those two levels was enough to trigger some long exposure by yours truly.

My vehicle is some out-of-the-money December calls in the S&P, which may or may not be the right time horizon or directional bias BUT you can do anything as long as you're disciplined."

Into the closing bell, after some nifty two-sided action on expiration, I re-iterated that stance when I shared the Buzz below:

"BKX 47? Check!
"S&P 1350?  Check!

"Being so fried after a week in the trenches (following 12 days without power)? Priceless!

"Given that I've already sucked down the theta (time decay; weekend option premium is typically taken out of options on Friday) in my S&P calls, I'm going to carry my long position into the weekend. It's not a huge position (always honest) but it's directionally where I'm at for a trade with defined risk.

"When I started writing almost 13 years ago, I looked at the weekend as an opportunity to blow off steam and have some fun. These days, my requisite respite includes a trip to the chiropractor, a puppet show with my daughter and, well, happiness (there is a huge difference between having fun and being happy).

"That doesn't mean I'm not stressed -- in many ways, I've never been more stressed -- but at least these days there's a bit more balance. I suppose the longer you wait for dinner, the better it tastes. Anyway, I wanted to make sure I updated you on my risk, and took the time to wish you a good weekend."

Fast-forward three days. My back feels much better (I've been doing Myofascial Release, which has worked wonders, on top of the chiropractor and weekly yoga sessions), the puppet show (and the weekend as a whole with the family) was terrific (and much-needed) and we walk into work to find global markets glittering green.

Better lucky than smart, for sure, but we'll take what we can get as we tiptoe toward year-end.

Random Thoughts:

Twitter: @todd_harrison

Position in SPX

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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