Humble bulls are happy bulls!
Good morning and welcome back to the wetted bed. The bulls continued their slide down the slippery slope yesterday and, let's be honest, they're really beginning to stink up the joint! Day after day and trade after trade, they've attempted to make a stand but, thus far, they've come up with bumpkus! Will today finally be Hoofy's day in the sun or will Boo once again steal the spotlight? It's Thursday in Minyanville, folks, hop on and let's take today's Minxy ride!
I've always considered trading to be more of an art than a science and, as such, beauty will always lie in the eye of the beholder. How many times have you looked at a painting and said "wow, that's pretty cool" while your friend/spouse looked at it and said "ugh, that's nasty!" That same dynamic exists in trading and the subjective interpritation of the metrics will seperate the Dutch Boys from the Van Goghs.
I bring this point up as the sentiment is clearly deteriorating and, invariably, that'll lead to one of two scenarios. Either it's going to become self-fulfilling and, in the process, take this selloff to depths unknown OR it's going to provide a tremendous zag opportunity for the traders among us. Our ability to differentiate between the two will dictate our success in the weeks ahead.
Curious Minyans have asked me if yesterday's late day appendage add was the beginning of the Sham portion of our latest thesis and, the truth is, I'm not sure. My gut instinct is that the October lows will eventually be dust in the wind but, barring a systematic shock, I have a hard time seeing it from this (oversold) juncture. Can it happen? Sure...but with everyone staring at the same levels, we're either going to blow through them or not get there at all(on this leg).
With that said, the long side is far from compelling and I've been sure to define my risk profile. We're surely coiled, the pessimism is starting to get loud (duct tape?) and the hardest fade is to buy 'em. However, the trepidation in the market is there for a reason and the world IS a fragile place. We must respect the dynamics in play as we (humbly) try to find our way.
One step at a time, my friends, and today is promises to be interesting. If you find yourself hoping, pressing or guessing, identify it and take a step back. It's easy to get sucked into the whirlwind on a daily basis and the only person who can stop you is YOU. Patience and discipline, I'll say it again, will prove to be your staunchest allies when trading.
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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