Danger Will Robinson!
Hoofy--why the long face?
Where have you gone, Joe Dimaggio
A nation turns it's lonely eyes to you--woo,woo,woo
What's that you say, Mrs. Robinson
Joltin' Joe has left and gone away--hey,hey,hey
The morning session continues to edge along and our much discussed support levels are going, going....let's just say that they're in trouble. I'll once again draw your attention to the financials as they're the story of the day (thus far). My buddy Kevin from Dorsey Wright just pinged me to make sure I saw the FNM multiple bottom breakage at 61 and I assured him that I did. As discussed earlier, I added back some April puts in the name and I'm currently in watch mode. Down some more and I might take the trade--if it rallies I'll likely add to my position. So you know--and as always, in the interest of full disclosure.
I've been waiting for a little liftage such that I can add my leg into the bear costume but, thus far, we've yet to see any. The breadth is horrid (3:1 negative), the S&P is in the process of a downside resolution (pennant formation), the BKX is violating the February lows and tech (thus far) doesn't have the oompha to offset these negatives. I think that Friday's scared bear rally took out a lot of shorts and, as we discussed, that's taken a level of demand out of the market.
Watch Friday's lows (S&P 812ish and NDX 964ish) as the first area of support and then the February lows (S&P 806, NDX 938) as a more important zone. While I've been bearish and I'm admittedly smaller than usual, I will not let emotion factor into my trading process. I've made some tactical deployments of capital on the opening and I'm scanning my universe for actionable trades (either way). Pressing and guessing always has a way of biting you in the can--stay sharp and don't trade just to trade.
While this is a difficult juncture, I continue to feel that some serious meltage is a necessary precursor if we're to get a sustainable bullish phase. The VIX is up a couple, I'm beginning to see some large put buyers and we're starting to take out technical support levels. That's negative in the near term but it's something I wanted to see as we patiently wait for Tony's ducks to line up with my critters.
I've got to jump and juggle--as always, I hope this finds you well.
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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