Hoofy the Hillclimber
I have run through the fields
Only to be with you
Only to be with you (U2) Thataboy Hoofs, Daisy is surely waiting for you with open arms...she's good like that. However, before you pop the champagne, I would remind you that there are many hours left in this session. It's O.K to be bullish...but it's always necessary to be disciplined. If this tape has taught us anything, it's to expect the unexpected and not get cocky. In the interest of viewing our big picture as a series of little pictures, we now cast our eye towards S&P 810 and NDX 850 as upside resistance levels. The tape surely acts jiggy, but I've always found "in betweens" to be an effective method of trading. In other words, if I bought 100,000 shares of Raiders Inc, I may sell a partial amount into this rip. How much? Well, that depends on your view of the tape and your individual risk profile. Yesterday we spoke about trading style and the necessity of identifying whether you're a "forest" player or a "tree" player. Personally, I'm so close to the action that we may need to take the analogy one step further. Let's say, for purposes of this discussion, that I live in the bunny hole (very active trader). When my view warrants it, sometimes I'll step out of that bunny hole, open up my stance (risk profile) and give my positions a little "room." My point? You can always adapt your style to the field position of the tape. It's what we do. The S&P breadth has turned (marginally) positive and, as that's been the biggest thorn in the side of this tape, this is a constructive sign. Continue to monitor this as it'll be a "tell" if it starts to fail. The banks (BKX), meanwhile, are tacking on a 4% gain right in the face of those panicked "bid wanted" (corporate paper) players this morning. While they "may" eventually be proven right (before this bear is all said and done, I think they will), this is another example of how emotional decisions are typically costly. Timing is, indeed, everything. The Nazz continues to outperform and, consistent with the fakakta mindset of the masses, the buyers have come alive at higher levels. The question on everybody's mind is: Is this move sustainable or is the Minx just sucking the buyers in before cruel reality sets in? I've shared my thoughts with you, but I would also stress that we don't need to make that decision just yet. Take our journey one step at a time, listen to what the market "tells" us, factor all scenarios into your risk profile and trade within your means. I've got a lunch meeting at noon and my posts may lag for a bit, so thanks in advance for understanding. I hope this finds you having a prosperous day, mon frere. R.P Long QQQ calls
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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