The DAX just turned negative on the day...keep an eye on Europe!
Paulie might have moved slow, but it was only because Paulie didn't have to move for anybody.
The Ethiopian shim sham continues as the tape slowly struggles to assert a direction--and it's very quiet in the city of critters. Fokker just pointed out that MXIM is trading funny. Hey Spider-- How is it funny? Is it funny like a clown? Does it amuse you? Make you laugh? WHAT is so funny about MXIM? What the BUCK is so funny about MXIM?!? Do me a favor...go get your shinebox and come sit next to me--I wanna show you something.
One of the first lessons you learn when trading is that once in a while, everyone's gotta take a beating. The trick, and this distinguishes good traders from great traders, is knowing when to lick your wounds versus when to make a stand. There is a fine line between stubbornness and conviction and making that distinction is an acquired skill set. If you cross that line, aggressiveness becomes recklessness and you're bound to take a hit.
I was having this very conversation with myself as the Minx was trying to make an upside move and I kept pulling up my (bullish) stochastics. While I typically follow these oscillators, there are times when I'll call an audible (like I'm doing now). The question is: where do you say "uncle" if you're wrong?
Discipline likely dictates setting a stop on my bear appendage somewhere beyond S&P 870 but, interestingly enough, my instinct is to ADD another appendage if/when we got there. What I'm trying to ascertain is whether I've got an adequate edge in doing so. I mean, this tape has a way of making us all look like shmucks on wheels, Maury, and we've got to constantly monitor our actions and reasoning.
Turning our attention back to today's action for a moment, the internals are slowly starting to slip and the tape is reacting in kind. Keep an eye on the semis (approaching our neckline again) and watch the financial duopoly (BKX/XBD)--when these two complexes point in the same direction (and are supported by the internals), it's typically a strong signal. As I said, there are constructive signs out there (retailers. software) but, as a trader, you learn to place more of an emphasis on certain "tells."
As I write, I'm seeing some macro hedgies hitting the SPY's 500,000 at a clip and, while we saw the same thing yesterday morning (before the Snapper), I wanted to pass it along. Other than that, it's been fairly quiet although I have noticed that the dips are "cash led." What that means, quite simply, is that the pressure is in the underlying stocks rather than the Spoos. If you put the S&P (cash) next to the S&P futures on your screen, you'll likely see what I mean.
I'm gonna jump as I've got a lunch date with Kaaaaaaaren and Janice Rossi...and this should be spicy! I hope this finds you faring well, my friends, and not trading "just to trade." There are times you'll be in a rhythm and times you're feel "out of sync"...the key is to take your cuts when you're seeing "it" and, when you're not, leave the bat on your shoulder.
I'll be back, Mon Frere...good luck!
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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