The Rubber and the Road
Darn! That Hoofy's got a lotta gas in his tank!
Good morning and welcome back to the Minxy motor speedway. The year end race has kicked into full gear and the critters are revved up and rarin' to go. Will Hoofy's green team ride the little engine that could all the way to the finish line or will Boo's crew once again send the bulls to the pits? It's another session of thrills and spills, sports fans, so strap yourself in and let's get rolling!
Barring an earth shattering come from behind win, the bears look poised to take the trading crown for a third year in a row. With that said, the bovine have closed the gap considerably since the mid-October time trials and will look to finish strong. There's plenty of fuel for thought this week as catalysts abound and, with a few scant weeks left in the year, time is of the essence. You can be sure that traders will be pushing the petal to the metal as they race for some last second performance.
There are a few ways to approach the speedy action and your method will depend largely on how you prefer to drive your portfolio. You can juice your engine with turbo-charged growth stocks and go for it-but if you do that, you're more likely to crash into one of the turns. Conversely, you can slow down, carefully study the track conditions and increase your odds of safely arriving at your destination-albeit at a slower pace.
About a month ago, we discussed a (humble) year-end thesis called "Razor Burn." In a nutshell, it called for a pullback-which we got- that would plant the seeds of hope (for the bears) and doubt (in the bulls). The second "leg" of the trade dictated a furious rip higher that sucked everyone into the market for the perceived year end party (in motion). If (big if) this thesis continues to unfold, we should be nearing a short-term top that sets the stage for a sobering holiday for Hoofy.
Of course, timing is everything in this business and being early (or late) can be a painful proposition. Traditionally, the news is always the most positive at trading tops (and dire during downside cusps) so keep your wits about you as we navigate through this financial traffic. Trying to make up for lost ground on a slippery track is a dangerous prospect-particularly when there are so many cars on the road. Define your tactical strategy before you merge into today's mix and, above all else, remember drive safely-you're only racing against yourself.
Good luck today.
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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