What do you MEAN I have to return the hat, Hoofy? That's just not right!
Satisfaction came in a chain reaction-do you hear?
I couldn't get enough, so I had to self destruct
The heat was on, rising to the top
Everybody's goin' strong, that's when my spark got hot.
Oh Jeez, I suppose it was only a matter of time! Bell Bottom Boo just shimmied across the trading floor doing his best John Travolta impersonation! I know what he's thinking-Hoofy got caught with his pants down yesterday when every hedgie and their sister got long in front of the inevitable Santa Claus rally. I don't know how many times our young bear has to be slapped around before he learns his lesson, but the fact that he's already celebrating is starting to concern me. Let's take a look.
These are huge levels for the tape as the SOX is clinging to support and the S&P is doing the same. Pull up a six day chart of the S's and take a look at that tricky "W" formation I was pointing out the other day. If you draw a trendline starting at the first bottom (Monday) and extend it through the second bottom (Monday), you'll find that we're sitting directly upon it right now (which, by the way, is also the 100-day moving average). Don't think the bulls aren't acutely aware of the implications involved in this juncture (it's make or break)-adjust your strategy accordingly.
We often discuss the importance of horizon when crafting a tactical strategy and understand that I'm going to adapt my strategy to my (shortened) time frame (Friday). We've been playing the Razor Burn thesis since October 29th and while I'm still committed to it, I'm going to place stop levels on my exposure. This way, if we hold these levels and the stochastics kick in, I've defined my exposure. If the burn continues, I will roll down my stops and lock in a gain. I'm currently weighing which, exact levels, I'm going to use but for purposes of discussion, let's say S&P 900.
Taking a walk through the morning sunshine, we find stinky breadth among the Minyans. As it stands, losers are beating winners 2 ½ to 1 while downvolume is swallowing upvolume. The all-important financials are trying to find their legs (watch Citigroup) and BKX 750 remains an important support level there. Meanwhile, whoever said that this is a soft selling season hasn't been watching the action in the retailers. They continue to come under pressure and that's weighing on the collective psychology. Finally, there's not much going on with our macro-tells, and outside of some sneaky crude action, they're waffling around a bit. Uuuummm....waffles!
And then this one time, at band camp, Grandpa Neil Glassman continued to lead the field in the battle for good karma. The charity auction continues, my friends, as the one-of-a-kind Critter Poster continues to be the talk of the town. See the last post for details...and know that there's a rumor that Daisy will deliver the prize herself. I can't confirm this, but I will do some work.
I hope this finds you well.
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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