Fade the Fade's Fade
I always like to show up when it's least expected!
Stocks open lower as traders digest the economic downtick and treasury secretary/right fielder Paul O'neill's resignation. As it stands, the market opened below our monster support levels but you should expect the bulls to make a stand and defend their turf. The news this morning was much worse than expected and while we certainly need to factor it in, we must also remember that the market doesn't trade only on the daily news. Keep that right hand up.
My dilemma remains one of timing as I sense that the long side is crowded and the sellers will wake up at lower levels. Still, nothing is easy in a bear market and I'm quite conscious of a potential Snapper in the face of bad news. Yes, it seems counter-intuitive in front of an Iraqi deadline (and on the heels of bad economic numbers) but it's precisely times like that when you have to be the most careful. If something appears too easy in this market, it probably is.
I'm going to keep my leg in the metaphorical bear costume (25% conviction on the short side) as I continue to feel that the market trades "off" into year end but, with that said, it wouldn't shock me if we had higher prices to make sales. Am I talking out of both sides of my mouth? That's never been my style, cookie, so let me try and clarify: I'm still bearish-but I'm wary of turtle cameo (Snapper) first. I'll always be honest with you and as I feel it, you're gonna read it.
Monitor S&P 900 and NDX 1050 on the upside (past support=future resistance) and don't trade for the sake of trading. There are a lot of players "caught" right now and we know that emotional markets are difficult to game.
I'll be back....good luck.
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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