Editor's Note: Todd posts his vibes in real time each day on our Buzz & Banter.
It's Turnaround Tuesday in the City of Critters as traders are fired up for an abbreviated four-session set.
The elongated requisite respite was well-received, if only as a facilitator of balance and an ambassador of quality time. For my part, that included a visit from my brother and nephew (dripping in Ravens championship gear), serious smiles from our three kids, and yet another bout with my herniated disks, which shoot intense pain down my right side.
Indeed, I plan to stop "drugs that mask the symptoms" (shots, MFR) and explore "medicine that cures the disease," even if that includes surgery. At 43, I'm too young to be in this much pain; I have too much to do, and a young family to do it with.
In any event, here are ten things you need to know as we start our week:
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I edged into some short side exposure ten days ago, trading IN-N-OUT like a burger (read: flattening at the end of each day) until I went home short last weekend. We were trading at S&P 1518 at the time and entered today pretty much in the same place (barely under my admittedly tight stop level) and there's a lesson in there. When trading options with a price stop, you risk a steady drip of theta, or the decay of time premium when the tape slithers sideways.
I'm still there but admittedly, my patience is running thin. And, putting on my discipline hat for a moment, I've had solid success with "hit-it-to-quit-it" trading, mostly in individual stocks, and this position is getting long in the tooth despite still being in the game directionally. I wanna see how the tape -- and in particular, the financials -- trade today, and I'll update my risk in real-time on the Buzz.
Professor Fil "My Pockets" Zucchi deep dives into DeMark analysis, the recent signals, and what it means.
As Friday was options expiration -- and the market was closed yesterday -- we'll see some hangover this morning as dealers square their extraneous risk. That should abate by the time we eyeball our next meal, even if it's a liquid lunch (juice press, not martinis).
Commodity volatility typically precedes equity movement, and gold took it on the chin (again) last Friday. I've included a chart of gold vs. the S&P below as a visual reference. The next tangible technical support is gold $1525.
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Hoofy and Boo will soon come back to life; if you don't know who they are -- and if you're in need of some smart smiles -- you can check them out here.
The VXO (INDEXCBOE:VXO) (currently trading with an 11-handle) is edging toward 15-year support (in and around 10). That could be bearish, but I will draw your attention to the three-plus year stretch (2004-2006) where it stayed there as it paved a path of maximum frustration.
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The $12 level in BlackBerry (NASDAQ:BBRY) remains a shopping list item (50% retracement of the move higher since September) while $28 is a level of lore for Facebook (NASDAQ:FB), and an opportunity to define risk either way you choose to play (my sense is it breaks lower, but I currently have no position as I recently covered the stock there after putting it out near $33).
I've only got a single position left in my cannabis plays; that space got creamed on Friday as the viability of select vehicles came into question. I will again say that why this is perhaps my single best investment thesis for the next decade, there is huge tracking risk. In other words, we can be right on the story but wrong in the stocks we choose to play it. Truth is, if and when push comes to shove and this thesis gains steam, Altria (NYSE:MO) and Archer Daniels (NYSE:ADM) will likely bogart the space (although they're far from pure plays).
Good luck today, and remember that profitability begins within.
Disclosure: Minyanville has a business relationship with BlackBerry.
See also: Why Stocks Are Ignoring All Reliable Market Indicators, and How to Trade Anyway
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 firstname.lastname@example.org.
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