This is N-V-T-S NUTS!
When you get to the bottom
You go back to the top of the slide
And you stop and you turn
And you go for a ride
Will somebody please give the Minx some lithium! She's been all over the place today and she's driving traders towards the rubber room! Bipolar? That would be an uptick! Let's see...gap up, hard press lower, jam higher, compression lower, rip higher...now melt? Calgon...smack me silly!
I've got to clarify an excellent point that was raised by one of our faithful Minyans. I often talk about the importance of discipline and the necessity of following our tells. This begs the very obvious question: With the banks, brokers, semis and internals all pointing higher today, why would I fade (read: sell) the tape and add an appendage into our metaphorical bear costume?
It's a legitimate query and I'm not certain I've got a succinct explanation. I suppose that, with my technical levels broken (NDX, S&P, BTK, SOX and BKX) I wanted to give Boo the benefit of the doubt and a little bit of time. S&P 870 served as a backstop (still does) and until we breach that zone to the upside, fur is my outfit of choice. Decisions like this are a perfect example of why trading remains more of an art than a science.
As I'm write, the tape has turned rather fugly and S&P 840 is in serious jeopardy. As we discussed this morning, this is yet another technical inflection point and virtually every trader in the market is staring at it (or should be). Could this be the ultimate "suck in" the other way (bear trap)? I suppose...but the fact that the VIX is flat (QQV is down!) tells me that a fair amount of complacency remains in the tape (bearish).
I'm likely gonna stick with my bear costume overnight as this reversal is sure to spook Europe. If, by chance, Hoofy's heroes can mount a comeback and defend S&P 840, that 'could' shift sentiment back the other way. Pong anyone? I certainly feels that way...although I think the burden of proof rests with the bulls.
Some day we'll look back at this and it will all seem funny. Until then, we've got to suck it up and take what we can get. There's a lot of uncertainty in the world and it's making for a tricky tape. It's important we remember what's important and maintain perspective in the face of adversity.
In that vein, I've got my buddy Lionel's birthday tonight and I'm gonna try and sneak to the gym and work off some of this stress before hand. There are many ways to deal with this silliness and most of them are destructive. Don't fall prey to the tempations, my friends, we need you sharp as we find our way.
Have a peaceful night.
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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