The bell rings, the ticks flicker and Hump Day in Minyanville has officially begun. Despite the various inputs and whippy crosscurrents, the opening was relatively muted (as far as openings go). It feels as if both sides of the band camp are waiting for a direction to emerge before making today's bets.
Traders are using yesterday's highs (for the averages and individual names) as short side stops so understand that IF we get above there, we could see some poppage. Until we do, however, the pushing and shoving continues to spin the market's wheels in the snow. That's just wonderful if you're long front month volatility! ;-)
I have 5-day gips (charts) up today I've drawn a couple of trendlines from yesterday's opening. These charts also allow me to clearly monitor the gaps in the indices created by yesterday's "up" opening. Remember to watch your levels as a backdrop when crafting today's trading thesis.
A check of the morning breadth shows losers trumping winners 3:2 in the NYSE and 4:3 in the Nazz. It's super early and, after the recent liftage, a downside probe makes sense. I continue to key off the BKX (down a quick 4) as my "health" indicator and the SOX (flat on the heels of Morgan's upgrade). The pure trader in me thinks that if there's a "big" call out there and the group doesn't react, it warrants a raised eyebrow.
In macro land, the dollar is marginally weaker, gold is a snippet higher (after getting spanked for 10%), crude a tad softer and Europe continues to come under pressure. The retailers are holding steady, specialty pharma has a bid, and Fokker--I kid you not--has a picture of Ashley and Mary-Kate Olsen on his desk. The Olsen twins?
So you know, I was toying with the idea of rolling my 200 S&P February 830 puts into 100 of the S&P February 840 puts for even money. IF I were to do this (I haven't), I would have picked up ten points in strike but given up half my size. I decided to keep my "punt" and see how the market acts after the rally attempt we're about to see.
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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