Hey Toddo--pass me my harness so I can scale this wall of worry!
I ain't often right
But I've never been wrong
It seldom turns out
The way it does in the song
Alright, so what have we got today? The breadth is 2:1 positive in the S's (N's not nearly as jiggy), gold is getting waxed (again), crude is down marginally, the S&Ps have managed to (thus far) hold above the all-important 845 level, I'm seeing massive short covering and I preach discipline over conviction. What didn't I stop out my schnitzel on the first tickle through resistance?
It's a valid question--discipline has served me in good stead over the course of my career and I'd be a fool to discard it now. However, there IS a method to the madness and, right or wrong, I'll always be forthright with my fellow Minyans. We can learn from both the good and bad trades and I'll share both with hopes of adding value to the process.
My initial reasoning on the small fade was that I knew that the nervous shorties would be scrambling on the opening (they are/did), the banks traded right to resistance, my risk is defined (via option premium), the intraday stochastics were (and continue to be) overbought and I wanted to see the tape "settle in." Yes, the resistance discussed this morning (ie NDX 980) were 'right there," but for purposes of my work, I sometimes use "zones" rather than absolute levels for the indices (particularly in emotional tapes).
Is this rationalizing? I don't know--I strive for a constant thread of discipline in my process and as I was wading through the vicious crosscurrents this morning, I fell on that side of the fence. I'm quite conscious of the coiled nature of the tape--which is why I've defined my risk-but, as it stands, I don't "think" the Sham (stiff lift) is already in motion. Am I willing to bet the ranch? No shot. Does the above mentioned reasoning stand the smell test for my schnitzel? I believe it does.
I want to see how the tape digests the next hour or so and, as it's thin as a whisper out there, I'm going to do a bit less and try to wrap my arms around the flow. As you know, I'm operating with makeshift systems today (figures, right?) and while I'm trying to pump out as much content as possible, my resources are limited.
Hope you're faring well, my friends...I'll be back.
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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