It's on like Donkey Kong at S&P 1200!
Ketchup Buzz and Costume Fuzz
Gate Sniffage (9:52)
In the spirit of my opening vibes, I've nibbled on select semis and banks for a schnitzel. I appreciate the potential for a pullback (given resistance) and I've set some tight stops underneath. And I'm looking at my bull costume for the first time in a while.
Where's the Beef? (10:03)
Somebody hide the glue. Please take away the Nyquil. And whatever you do, don't let me have anymore sugar! Am I really looking at my bull costume with the S&P testing massive and monster resistance? Yep. My question is one of stylistic approach--do I wait for a poke through the 200-day (1200)--like everyone else--or nibble a bit and set a wider stop below. I've opted for the latter, using the initial (opening) probe to add a bit of exposure in the semis and (gasp) banks.
I'm keenly and acutely aware of the risks--trust me--but I'm gonna slip one leg in the bull costume and leave some room for another test lower. My initial stop level is under 1190 although, as we know, a much meatier support rests a bit under 1180.
And a retort, of sorts, from Pepe Depew (10:35)
"Toddo and I are trading opposite each other it seems. He's joined Hoofy's camp, while I'm looking to fade the shakeout pattern that just occurred in the S&P 500 with the reversal up. But really, what we are talking about is simply a difference in time frame. He is far more active than I am. By the time my trade (fading the shakeout) works - if (big if) it works - we'll likely be on the same page given our similar longer-term views. The shakeout pattern for the S&P 500 works to 1210-1215, which is the first level where Boo hopes to make a definitive stand and why I am scaling into exposure. Above 1220 and things get problematic for Boo - not impossible... just... difficult."
And then there's Professor Succo, who always provides some proper perspective (11:04)
The "traders" have spoken--the lows are "in." I cannot and will not argue that point. I have stressed the primary driver by far for stock prices is sentiment, the risk premium people attach to assets. If they like risk, stocks go higher. But I just want to remind everyone that the risk is high. Nothing has changed to the chronic twin deficits and the historic levels of credit. What has changed is the growth of that credit...it is slowing. Volatility seems to be dampened only temporarily and then it picks up again, although major ranges have not been broken. The more it bounces around, the more likely it will be broken. If you are going to take risk, please be prepared for volatility."
Alas, some standard Randoms on a cold, dark and dreary Tuesday...
- The XAU (+3%) continues to do its thang as the dollar tickles session lows (-1%). I have some exposure in this complex but it's distinctly different than the "trading try" described above. That's speculative stuff (for a trading rally) while I hope to hold this exposure for the long haul.
- Along those lines, keep an eye on white lightning as silver approaches multi-year highs between $8 and $8.50.
- Define your horizon (price or time) before you assume risk.
- No Way Out?
- Chinese Roach Motel.
- I'm a Mog. Half man. Half dog. I'm my own best friend!
- I'm keeping close tabs on market internals as Boo takes a downside swipe. Thus far, they're "fair" (3:2 negative although skewed by fixed income flux).
- Motoring with the other Bernie!
- eBay (EBAY) has come under pressure today on speculation that Google (GOOG) will rollout an online payment service like PayPal.
- Misses Von Mises!
- "Last Wednesday, the market staged a reflexive rally that quickly faded under its own weight. Refco news coupled with expiration was a problem because it added distortion to the picture. Free from the expiration shackles, stocks did exactly what was needed to begin endorsing the long-side with more conviction. Volume flows (up/down) were the strongest since August '04 on the NYSE at 6 1/2:1 and breadth was an acceptable 3:1 on the upside. Even-though sentiment never got to the point we find compelling enough to provide the big moves, Monday's price action was robust enough to force us into the bull's camp." -- Lehman Technician Jeff DeGraaf
- I'm looking forward to visiting the savvy soothsayin' Sommelier on Friday and shaking paws with the good folks of Raymond James.
- "The time to buy a stock is when the short-term owners have finished their selling, and the time to sell a stock is often when short-term owners have finished their buying." -- Sir John Templeton
- Lunch is here!
- Investors Respond to Fear, not Risk - by John Hussman, Ph.D
- No Pizza, no chocolate, no problem.
- They call him Fleck!
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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