I coulda been a bunny if I wanted!
Early in the evenin' just about supper time,
Over by the courthouse they're starting to unwind.
Four kids on the corner trying to bring you up.
Willy picks a tune out and he blows it on the harp.
(Creedence Clearwater Revival)
The afternoon sessions sloshes along as the bulls and bears sing their song. The tone of the tape soured somewhat as news of the Baghdad explosions surfaced. While that may not be the cause of the pause, the timing is awfully coincidental. Simultaneously, there were multiple sevens (millions) for sale in the SPY from a large macro hedge fund. I think I know who the customer is and, if I'm correct, he's bigger than a breadbasket.
Over the past eight months, we've seen more thrusts and pullbacks than the Playboy mansion. As a function of that rigidity, Hoofy the stud has very little performance anxiety. He'll keep dipping his wick until it doesn't stick (eww!) as it's been quite profitable. What we're trying to identify, as traders, is potential flaccidity before the wiltage begins. Maybe we should just monitor Daisy's expressions?
I just hung up with my boy blue after we discussed what, if anything, can shift sentiment. I opined that, more likely than not, only lower prices will quell the swell and introduce the notion that there is other risk besides missing a rally. Is it as obvious as the Cisco (CSCO:NASD) earnings? Doubtful (but not impossible)...the manic panic is such that the bulls will rationalize a negative report (if there is one). Friday's payroll numbers? Maybe, although Boo wants to see a robust report as he knows that bear market rallies always end on good news.
Why am I so certain that this is a cyclical (not secular) bull within the context of a much larger grizzly? There are too many reasons to list but suffice to say that I have no doubt that it'll play out that way. The only question--and, I assume, the most important one--is from where the despair will begin to scare. If the bears can't pass the bucket fast enough (and scoop the liquidity from their boat), the bulls will set their sights on S&P 1150 (which is a 50% retracement of the entire bear move).
First things first, we're edging through a pretty important juncture that may offer insight in that regard. I know that Scotto has been doing a lot of work on these crosscurrents and that column should post in the next day or so (it's a must see). Meanwhile, I'm watching S&P 1050 (NDX 1420ish) along with every other trader in the free world and scanning for gamma to put on my sheets. I continue to feel that fading (read: selling into) these levels is the money trade but I've constructed a risk profile that allows for me to be wrong. It's happened before and I'm quite certain that it'll happen again.
I wanna welcome the slew of new Minyans to our humble little town and thank you for your patronage. Please take the time to stroll through Main Street and check out the crittertiques. With the holidays quickly approaching, early orders are greatly appreciated. Grandpa Neil Glassman bought all of his favorite accounts Minyanville fleeces and I know that they're quite excited. Can you believe it Joanne?
Finally, and something to stick in the 'get outa here' folder. While in Florida on business, I spent some time with my (gorgeous) grandmother Dorothy and my aunt Phyllis and uncle Larry (from Cincinnati). As it turns out, they both grew up with our very own John Succo! "He was such a nice young boy" they said. "He's still a fine man." I replied. Wierd, right?
Good luck into the close.
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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