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The Calm before the Storm


You can feel it, can't ya? It's as if everything is standing still and the only sound you hear is your heart beating against your chest. Yes, there's something in the air...a type of curious anticipation that's akin to standing on the shores and looking out over a vast ocean. While the morning news beats against the sand, I find myself scanning the horizon awaiting Mother Nature's wrath. We know its coming, fellow Minyans, and now is the time to prepare ourselves. Remember, Noah didn't wait until it started raining before he built his ark.

The research front is relatively quiet this morning and that's probably a good thing. UBS Warburg downgraded Amgen, Solly booted COX and upgraded CVC, CHTR was kicked by Morgan and there were a handful of earnings previews. Other than that, the beaches of Minyanville are pretty calm. We've discussed out technical levels but, for those without a page down button on your keyboard, S&P support is 895-900 and August's intraday high (next resistance) is around 925ish. For the NDX, support rests at 1000 and we're already tickling resistance at 1052ish.

I'm unsure of the timing (and timing is everything), but I'm likely one rally away from slipping the last appendage of my bear costume on. For newbies to this column, each appendage (2 arms, 2 legs) represents relative conviction. In other words, one leg would mean 25% conviction, two legs 50% conviction and so on. I began writing in July of 2000 and I believe, since then, I've been 100% bullish or bearish three times. Please know, we're not talking 100% invested (short), we're talking conviction level. I've been admittedly tepid for the last couple of weeks but as I'll never hide from history-that's not my thing-I'll continue to offer my honest assessment of the landscape. With that said, please know that I do not intend these comments to come across as advice. I am simply operating with the hope that sharing my thoughts will add value to your process-no matter what your style.

There will always be reasons for the market to be at a particular price at any particular juncture. One month ago, the notion of back to back rally days was as a foreign concept and traders we're conditioned to short every lift. Now, those same traders are pining for pullbacks so they can get involved on the long side.

Put another way, if, on October 9th, I told you the S&P and NDX would be up 150 and 250 points, respectively, what would you have said? Just as the bears faded the first through third rally, covered on the fourth and got long on the fifth, the same phenomenon will likely be in play on the way down. It's surely going to be a battle as portfolio managers fight for their professional lives. However, it's my sense that, if you want to buy stocks, you'll have your chance at lower levels. Patience, my friends typically brings price.

I remain intrigued by the notion of this rally ending on good news rather than bad, but that's just a random thought I wanted share. Our job, in a nutshell, is to identify the disconnect between perception and reality and that's what I'm trying to do in my head and in this space. Make decisions consistent with your individual parameters and always leave room for a margin of error. As always, I'll keep you up with what I'm seeing as we find our way. Together.

See you after the opening.

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

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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