The Bull-Bear Debate: Are We Topping?

By Todd Harrison  JAN 29, 2013 11:15 AM

Observations from the front on Turnaround Tuesday.


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

Time is the most precious commodity; this is one of the many Things I’ve Learned.

So, out of respect for your time and in large part because time management has never been my strong suit, I’m gonna dive right in on this second stretch of our five-session set.

The bulls will argue that they continue to work off the overbought condition as a function of time rather than price.  The debt ceiling has been pushed to May (which is an eternity in our immediate-gratification world), durable goods yesterday signaled a manufacturing rebound, the Fed is a never-ending spigot of liquidity, and credit markets suggest higher prices still for stocks.  Hey, they're bulls—they get paid on higher prices.

The bears, or what's left of them, are stroking their singed fur and wondering if they've lost their minds.  They can trot out things like the VIX (^VIX), or point to S&P (INDEXSP:.INX) 1520 (the technical target from December when most folks were bearish) or spout of smart-sounding phrases like "cumulative imbalances" and "the devolution of social mood" but they know that nobody will care until they're forced to care, and they won't be forced to care until prices are lower.  Sounds backwards, and that's because it usually is.

Me? I'm not mandated to take risk and I don't answer to anyone (except my wife, which is an entirely new experience), so I'm content to trade surgically. That approach garnered 60% returns last year, at least until I broke my own cardinal rule and mentioned my performance during a Twitterthon, which of course top-ticked my year (I ended 2012 up mid-40s, which isn't bad but well off my best levels).

The key to that approach is proactive patience, which is to say that you must remain alert even if you're not lugging sizable risk.  And, of course, I try to follow my 10 Trading Commandments, which remain as apt today as they were many moons ago when I first shared that fare.

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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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