Hope Springs Eternal
Wait for ALL of your ducks to line up before putting on risk, cookie...it's just that simple.
It's a crisp winter morning in Minyanville and the critters are scurrying about as they prepare for the day ahead. The pre-market futures are shrugging off a lethargic Europe and, as I write, I'm seeing hedgies take some QQQ's en masse. The early chatter is that North Korea wants to play nice-nice and that, coupled with decent retail sales numbers, is emboldening trading types.
Across the pond the Bank of England and the ECB decided that rates were fine just the way there are, thank you very much, and attention has shifted stateside as we digest the morning news. Thus far, pertinent research includes a Deutche Bank upgrade of FDRY and XOM, Lehman upping BK and Solly booting the European semis.
Walking through my charts this morning, I've noticed that the BKX and SPX stochastics are pixels away from a sell signal and that's worth a mention. It's surely been a tug-o-war of late and I can see why some people are optimistic. I'm not ruling out an "up" year for the market (within the context of a larger bear cycle) but my gut is that the downside will be tested first. That doesn't mean it's today's business, per se, but my sense is it's "out there."
Our tells remain largely unchanged as the semis and financials will set the tone for the N's and S's, respectively. The retailers are also a focus as they were seemingly a crowded short entering these numbers. Other notable gauges include the internals, GM, the dollar and crude.
I hopped into my new digs today with one leg in my metaphorical bear costume (25% conviction on the short side) and a decision to make. I plan to watch the opening and sniff out the underlying tenor before altering my posture. There's low level chatter of some alligator footprints (allocation into stocks) and I'm gonna make some calls in that regard. As always, I'll letcha know what I find.
Deep breaths as we roll up our sleeves and prepare for another day of fun in the sun. Remember, cookie, unless you're mandated to play every day, you should attempt to identify an advantageous risk/reward profile. There's a lot of traders standing in a circle shooting at each other and there's gonna be casualties at the end of the day. I don't want to see any Minyans clipped by the crossfire so choose your spots, think positive and trade to win.
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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