I'm going to Sizzler baby!
"I've seen you guys can shoot but there's more to the game than shooting. There's fundamentals and defense."
--Coach Normal Dale, Hoosiers
Turn those machines back on! The change in noncritter payrolls balloons by 126,000 (exp. 65k), the unemployment rate is shaved to 6.0% (vs. exp. 6.1%) and manufacturing payrolls slip to -24,000 (exp. -20k). Further, last month's noncritter payrolls were revised to 125,000 (vs. 57k). All in all, a blowout report (as many expected) and now comes the tough part--the reaction.
The futes popped and dropped as the knee-jerk reaction was the initial fade. I made a token sale on that spike (trading gamma) but I "think" that Hoofy will try to rally the troops (at least once) before Boo imposes his will. Thus far, Scotto's script is playing out verbatim (no mushing) and we now have the second punch of the 1-2 combination. If Boo is gonna charm the farm, it was necessary for this news to be robust. It was, and now it's time for him to put up or shush up.
I'll be keying on the rate sensitive issues--namely the piggies and homies--as we find our way. They've been the dry eyes in the house and any rate concerns will permeate these sectors first. Also, the internets are a focus as they tend to turn (at market inflection points) before the rest of the tape. They acted drudgy yesterday and stuck out like a sore paw. Finally, let's not forget the semiconductor space as they're the psychological barometer for tech.
I'm operating in a fashion that will allow me to prosper if we fail (but protect me if we rip). I came into today's session with a spate of underneath puts, a ratio of underlying stock and some protective upside calls. I plan on scaling some of my long stock into the lift, nibbling on more underneaths and "let out" some shorts (vs. my calls). That'll enable me to take advantage of the jazz while keeping my gamma. A'ight?
Good luck, cookie, and hit 'em hard.
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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