The Bulls Try to Bum Rush Quarter-End
See both sides and avoid ambition.
Turnaround Tuesday has arrived but don't tell the bulls! They've got quarter-end squarely in their sights and as backward as it seems, they know that fund managers believe it's alright to lose money as long as others lose more. Though, making money if they under-perform their peers or their benchmark would be anathema.
That, to me, is the most logical explanation to yesterday's upside rip in response to what some circles were calling old news. Whether or not Big Ben actually pulls the trigger on QE3 (or whatever it will be called) with gas prices spiking is yet unknown. The specter of another shot of synthetic adrenalin, however, offered a spark in the dark on an otherwise news-free Monday.
As many of you know, and to recap for those who are new to the 'Ville, I traded primarily from the long side from December (S&P 1250) through the end of February, when our S&P 1360 price target was achieved.
That was the good news. The "other side" of that trade, literally, was that I flipped my stylistic approach and started tapping the short side in an attempt to get in front of "The Other Tail," as Bill Gross called it when he mirrored many of the vibes that have long lived in my mind's eye.
Stay humble or the market will do it for you indeed.
I pride myself on being honest and have no problem sharing that I've been flummoxed by the flickering ticks of late. Being away from the fray for a week -- if you didn't chew through my review of the YPO Business is Social event yesterday, there are good nuggets in there -- I was afforded some time to reflect, which is very different than having down time (I was wire-to-wire, 6AM-10PM every day).
I get it, in terms of the agenda (into an election) as well as the motivated efforts of central banks around the world to push our financial obligations into the future with hopes of saving the system today (we've seen this movie before). What's yet to manifest are the unintended consequences; be it the ramifications of our shifting social mood, the head-wind of upward taxation and austerity measures (read: slowing global growth), or perhaps something sadder.
The reality is that until the markets trade lower, any and all concerns will be deemed "paper dragons" by the Great Bull Rush of 2012. I learned a long time ago to respect the price action but not defer to it, and if the greatest losses are that of opportunity, I should consider myself fortunate. And of course, there's no shame in admitting it's hard, there's only shame in pretending it's not. There -- I think I’ve gotten enough axioms out of my system!
Having pared most of my April S&P puts before I left -- and, full disclosure, I rolled some of that exposure out on the calendar -- I watched more than I traded yesterday, although I did add a bit more paper into the hot popper. I've still got a handful or two of Research in Motion (RIMM) calls against that -- I'm trying to be patient there, as it held the December low -- so that's my story as I edge my head back into the game.
As always, we’ll be chewing through the dew in real-time on the Buzz & Banter. If you wanna take that puppy for a free-two week trial, just lettuce know.
Good luck today!
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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 firstname.lastname@example.org.
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