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Threading the Needle


If we can sneak through the upside resistance, will the technical types turn and cover?


Good morning and welcome back to the splendid splinter. When we last spoke, the battle of Evermore was in full swing and the great debate continued to rage. With reactive players hanging on every news blurb, the Minx scratched and clawed her way through another wayward session and, in the process, frustrated pretty much everyone. While we continue to dance through the muck and attempt to rationalize the irrational, each day is becoming incrementally more challenging. Thus, the natural question is begged: when will it end?

Once upon a time, traders of all shapes and sizes could actually game, with some degree of certainty, the overnight session for stocks. Further, it was entirely natural to extrapolate a trend and anticipate the future price action. 9/11 changed all of that. In addition to robbing our country of it's innocence, that fateful day forever altered the landscape of money management. It's certainly not the cause, per se, of our current malaise--that honor belongs to the bubble and it's residual greed. It did, however, make an already difficult environment a riskier place to conduct business and we're learning (the hard way) that the landscape has forever been changed.

As we edge our way through the latest global crisis, I'm left to wonder if there will ever be a post-war period in our lifetimes. I don't say this to bum you out--trust me, I'm all about perspective and making the most of a given situation. The fact is, those of us still in the game have done something right and, if we're to make it through to the other side of this cycle, we must continue to adapt, learn and evolve with the ever-changing market.

I certainly don't have the answers but, as I try and find the way, I've choked up on the bat in an attempt to put wood on the ball. That means, quite simply, that my goal is to identify advantageous risk/reward opportunities, lock in profits (when I can) and operate against the backdrop of capital preservation. Invariably, I will miss trades and as I'm a competitive guy, that's never been something I've been comfortable with. However, if we're to trade tactically, the focus must be on winning the moves we choose to play--not playing every move.

We enter today's session with the same quandary we faced yesterday. There's are compelling reasons for lower prices (geopolitical uncertainty, technical resistance above, fundamental invisibility) and an intriguing argument for a trade higher (stochastics coiling, wall of worry, near-term complacency in the bear camp). I zagged into the meltage yesterday and tried my Hoof on the long side (via defined risk paper) but, let me be clear, I'm playing smaller than usual. I'm not trying to be a hero and pick bottoms--over time, that's a losing game--I'm simply trying to peek around the corner for the next trade.

For all you gold players, I (humbly) opined last Thursday that there was downside risk to the commodity (for a trade) and, while I'm not involved, I wanted to follow up with a quick technical observation. There is a rather defined uptrend (from December) that comes into play around $361. As such, I wanted to make sure that those of you trading this complex have this level is on your radar--it's important.

The fun never stops and today should be no exception. The catalysts pick up the pace as Elmer speaks on the hill, the conferences schedule kicks in and earnings continue to pour out. This is a nutty world we live in but we've got two choices--we can pack it in and run for the hills or we can stand tall and fight the disciplined fight. Nobody said it was gonna be easy, my fellow Minyans, but it's not impossible either. Think positive, remain humble and take it one step at a time. You can do it.

Good luck today.

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No positions in stocks mentioned.

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

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