The Ballad of Hoofy the Kid
Have you come to raise the dead?
Have you come here to play Hoofy?
To the lepers in your head?
Did I ask too much, more than a lot
You gave me nothing, now it's all I got
We're Hoofs, but we're not the same
We hurt each other than we do it again (U2) Well, well, well, look who decided limp into the trading room. It's our ol' pal Hoofs, and he's wearing a sly smile on his face. Funny, you couldn't find hide nor hair of him during the early malaise, but consistent with the FUBAR environment, he's becoming emboldened with each uptick in the tape. Shocker! One of the primary rules of trading is the notion that you can always appreciate the price action, but you must never defer to it. In other words, the "action" or "eyes" can factor into your trading thesis, but if you bought (or sold) stocks purely because they act well (poorly), what's your justification if the stock (tape) reverses? This is, in a nutshell, why so many momentum traders have had a rough go of it. Setting stops, and rolling them up (down) during the trading day can help protect the day traders among you. Consistent with the earlier theme, the S's continue to act much better than the N's (Banks!), and the Dow's now managed to poke its nose through triple digit territory. After the week (month, quarter, year....) that we've been through, a little ebb is to be expected against the flow. If (big if) the S&P's can push through this zone, the next areas of resistance are SPX 850 and then the downtrend line at 870. In the NDX, let's call resistance 900ish. The early afternoon should be interesting, as I'm beginning to see some of those big SPY sellers turn to cover. Still, we are in the midst of preannouncement season and the internals have yet to confirm. I don't mean to bum ya out, Hoofmo, but there's no reason to swing for the fences. Hit for average, stay tight with your discipline and, above all else, remove emotion from the mix. Emotion is the enemy when trading. Hope this finds you well. R.P No positions in stocks mentioned
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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