Pulling Shorties from a Shell
Where your coffee cup was
And there's ash in the pages
Now I've got myself lost
Ladies and gentleman, children of all ages...if you've never seen a real life short squeeze, we'll you have now. The last hour was as vicious a squeeze as I can remember seeing, as those frisky semiconductor stocks took the rest of the tape for a ride. Now, we get to test out one of our favorite nonsensical trading terms: The contra hour. This, in a nutshell, means the direction from 2pm to 3pm is reversed from 3pm to the closing bell. Time will tell.
Boo just asked me if I was gonna shove him back to the bourgeois clan and I told him that discipline must always trump conviction. That said, if you can point to a discernable catalyst, you can elongate your horizon and adjust your risk profile accordingly. I see the jiggy action in the market, but I am also focusing on my trusty stochastics and while they're not timers, per se, they've proven to be reliable in the past.
Now, don't confuse my course of action with stubbornness...the ability of the market to shrug off negatives is clearly a positive and, as a function of that, I'm not as short as would normally be. We have "tells" for a reason, and when the internals reversed and the banks started to rally, it begged reducing exposure on the margin. So you know, my sense is that that rip higher was a big program that triggered short side stops. More on that later.
I am keeping Boo with by my side as I continue to feel this is a short term topping process and I can trade around that short bias. Please understand that my style is likely more aggressive than most, so make sure you choose a course of action that's consistent with your situation, needs and risk parameters. The earnings releases will continue to flow out and we've got some economic data tomorrow morning, so know that the overnight session will bring fresh data points.
I am absolutely swamped, so I gotta hop. Good luck into the bell.
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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