The Jedi Mind Trick
We've got the Chambo kid (CSCO) speaking at 12:30 and Dubya at 1pm--keep that on your radar!
Good morning and welcome back to the land of flickering ticks. With yesterday's treadmarks firmly imprinted across the bear's forehead, traders kept a weary eye on the newswires for after-hour preannouncements. Sure enough, a spate of pre's hit the wires--to the upside! With EMC and MERQ both guiding higher, a curious and confused Boo limped home wondering if his precious resistance was a thing of the past. I mean, he hasn't seen a bellwether preannounce and the futures lower (the next day) since TXN on 12/3 (gulp!). Buckle those seatbelts and strap on that helmet, cookie, it's Turnaround Tuesday in Minyanville. Let the games begin!
The single worst thing a trader can do is hope. I've seen it all too often during my years in the trenches and I'd be fibbing if I told you I wasn't occasionally guilty of it. It's especially tempting when you publicly express your views and it's something that I must monitor on a daily basis. Regardless of your market thesis, it's important to remember that we're just pawns in this Minxy game. I've long believed that humility is a necessary element of trading and if you don't police yourself in that regard, the market will do it for you. Discipline over conviction, baby...it's that simple.
I share these thoughts as we enter today's session with the tape tickling breakout city. As you know, I have been a big picture bear for a few years and remain steadfast in my belief that we have plenty of time before the tulips once again sprout. However, while that thesis surely serves as a useful backdrop, it should never stand in the way of making money on the upside (if there's a compelling opportunity). Trading purely from the short side would be akin to boxing with only one hand--and in this tape, we need to jab with our left while keeping our right hand up.
With that said, a quick check of our trading metrics brings us to a most interesting juncture. The EMC/MERQ tag team plants a bullish seed in the fundamental arena and, as such, furthers the psychological sea change. Before we write off Boo's bandits, however, it's necessary to note that the bulls need to do some more work before notchng the hat trick. Yes, NDX clearly broke a resistance level at 1050 (which now becomes first support), but the head and shoulder potential is still there (under 1070). In S&P land, yesterday's lift took up right to the trendline from the August highs (see it!). Last but not least, the semis and financials (leadership sectors) are both knocking on heaven's door (SOX 330 and BKX 800, respectively).
Elle, one of my best option guys, points out that the ten week moving average of investor intelligence has only been skewed "more bullish" twice in recorded history--1998 and October 1987. That's the kind of input that makes me tuck that right hand a bit closer to my chin as we find my way along our precarious path. Anyway you slice it, today's an important day for the Minx and it's no coincidence that these levels are lining up in a technical "perfect storm." We'll need to be tip top, shnitz hop and second to none (sir) as we figure this one out. The goal, as you know, is to be in a position to view prices as an opportunity (not a hindrance)--so remember the lessons learned (November/December) and don't add exposure because you fear missing. Emotion is the enemy when trading--so think positive, hone your focus and leave crazy on the bus.
Good luck 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 firstname.lastname@example.org.
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