Charting a Course
Just as I thought--one down day and the bears are pounding their chest!
Good morning and welcome back to the storming seas. Earlier in the week, the green swells swallowed the bears and Boo's bandits were forced to walk the plank. Evidently, some of the ursine escaped unscathed and turned the tide on Hoofy's Heroes. Was this the pause that refreshes the long side regatta or will the southern cross prove too heavy to bear? All hands on deck as we baton down the hatches, sailor--today's ship is about to shove off!
Yesterday's action was a textbook example of Trading Commandements #1 and #4-respect the price action but never defer to it and emotion is the enemy when trading. In recent years, the "fear of missing" has proven costly for trading types but, for some reason, they continue to fall prey to the same sirens. Remember, the difference between mistakes and lessons is the ability to learn from the past. It's not too late to start.
After the recent rally, one could argue that yesterday's pullback was the "intuitive" move. Now, as market players have a chance to digest the crosscurents and we approach the 50-day moving averages on the downside (NDX and SPX), the water becomes a bit saltier. Still, no matter how hard I try, I can't stop looking at the potential dandruff in our midst. Of course, that doesn't mean that this should matter for you--but, regardless of whether you've got claws or horns, you should be aware that it's "out there."
The fly in the ointment the last few sessions has been the internals and if you're not referencing them daily, you're at a natural disadvantage. As I said to Scotto, Pugs and G-Money yesterday, this is a bear market and, as such, we need all the help we can get. That takes many forms--including surrounding yourself with people you trust, keeping your eyes (and mind) open and staying in the loop of infornation. Find your team and dig in, friends...it's gonna be a long war.
Last but not least, a hearty congratulations to Mike Ligator for winning the "S&P" contest yesterday with his bid of 909.90 (vs.a close of 909.93). You've won a free tee, cookie--name your critter!
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 email@example.com.
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