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Rose Hill


Sometimes the ability not to trade is as important as trading ability.


Just like Jack the Ripper, just like Mojo Hand
Just like Billy Sunday in a shotgun ragtime band
Just like New York City, just like Jericho
Pace the halls and climb the walls, get out when they blow

(Grateful Dead)

The afternoon seas are a trading tease as the bears eye the fleas and bulls try to squeeze. Our aforementioned lows got punched in the nose but it remains to be seen if the sell side grows. On the one paw, the breadth (which was the most obvious positive) is slowly givin' it up, the banks continue to act lethargic and the semis have given up their 2% gain. On the other hoof, the bears have had ample opportunity to put a fork in the Minx and have (thus far) been thwarted. Tug of war on the trading floor? Absolutely.

The tricky aspect of this juncture is that we're both overbought (longer term) and oversold (near-term) at the same time. This highlights the importance of defining your time horizon before stepping onto the field. I've made no secret of the fact that I don't like the tape (on its merits) but I remain acutely aware of the agendas in play and the structural metric (liquidity). The question I'm now chewing on (and the reason I'm so focused on the financials) is whether the headlines (reality) can prick the psychology bubble.

Today's session, in and of itself, is offering few clues. The banks have dried up a bit, the breadth is marginally positive, the biotechs and internets are still under distribution (albeit at a slower pace) and the tone is...jittery. As discussed this morning (f.f), I faded the opening and tightened up my stops on the peripheral exposure.

As it stands, the mighty Minx has put in three lower highs today and a violation of those trendlines will be the first hint at an upside agenda. From a broader perspective, I'm happy to use those rallies to add downside exposure (financials and techs) and keep some cheapie upside calls as a hedge. For the rest of the session, however, it remains unclear.

We've gotten a slew of new Minyans in the last couple of weeks so, at the risk of redundancy, I would like to remind you that this is an educational community and not an advice site. Our hope is that by sharing our insights, we'll add value to your thought process and allow you to make more informed decisions. If we can do that while, at the same time, raising money to help the kids, then Minyanville will have accomplished our goal.

As always, I hope this finds you well.

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