Controlling the Clock
If only those internals could turn, the Nazz WANTS to go higher!
The N's over S's theme continues as the horsemen and brokerage stocks play tug-o-war with the collective sentiment. While there continue to be isolated positives-Oracle (constructive chatter out of Apps World), telecom (feels "accumulative") and the semi's (act dry)--breadth is NOT confirming the upside. Remember, our goal is to line up as many ducks as possible before committing capital. If it's not there, don't force it.
One of the reasons I'm trading naked (sans bull/bear costume) is that I'm exercising my right to be disciplined. If I'm going to manage money in a particular way (Zack Crockett), my writing will always reflect that trading strategy. As you know, my predication is to trade less this year and identify advantageous risk/reward situations. I'll surely miss some moves but I don't want to play every trade-I just want to have a high win percentage on the trades I choose to make.
Today's tape is a true test to the above strategy. When I walk through the Nazz, my "eyes" tell me that the tape has an upside trade coming. The old school, meanwhile, is pointing decisively lower. As a tie-breaker, I'll usually walk through the internals, my levels and the flow (not confirming). When all of these inputs are pointing thataway, it's time to tighten up the risk profile.
A flat to up day will likely alleviate the short-term oversold condition and pave the way towards a test of the lower end of the range. The tape was overbought at resistance last week and option volatility was cheap (worth a try on the short side). Now, as fear seeps back into the market and the weak longs are shaken out, it's a tougher call (particularly after a string of negative sessions).
Finally, and in response to the Minyan Buc fans, I am acutely aware that offense wins games and defense wins championships (I was at the Ravens game, thank you). Still, this is a team on a mission and, if you saw the look in Gannon's eyes after Sunday's game, you know what I mean. Sixty more minutes, fellas...make me proud.
Hope you're stickin' em today.
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 email@example.com.
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