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Diggin' In


The breadth is getting worse!


"Ay, fight and you may die, run and you'll live. At least a while. And dying in your beds many years from now, would you be willing to trade all the days from this day to that for one chance, just one chance to come back here and tell our enemies that they may take our trades, but they'll never take our mojooooooo!"

--Sir William Wallace, Braveheart

Is it me or can you cut today's tension with a knife? The schvitzing critters just filed into my office with pained expressions on their face and I'll tell you what I told them--take it easy. We have two choices: we can run away or we can tackle the Minx head on and make some tough decisions. It's certainly not easy, but there's no hiding in this environment. Think about your goals, your investment horizon and risk profile and, above all else, think positive.

The financials continue to lead the tape (every time the BKX lifts it's head, the S&P futures pop) and the relative dryness in the semis is keeping the Nazz afloat. I've been eyeing the S's over N's pairs trade as the banks (and S&P) are more oversold than the semis (and NDX). If we rally, they'll likely "snap" faster and if we continue to slip, they've already absorbed a fairly significant drubbing. Plus, it feels like players are "hiding" in tech while the short side has probably increased in bank land. I haven't pulled the trigger yet (and I may not) but I wanted to walk you through my thought process with the hope that it adds to yours.

Once again, the majority of the flow/inputs I'm seeing seem to be more concerned with missing a rally than protecting the downside. I know we've touched on this already but over the last few years, selling hope and buying despair has been the money trade. Nobody wants to peg the "bottom" more than I do but despite the recent meltage--and there's been a fair amount--the tape still feels somewhat complacent to me. Am I pressing the bet here? No--I added my requisite exposure during the opening pop and set a level when my risk is defined. I just wanted to make the observation.

S&P 775 and NDX 940 (February lows) are areas where the bulls will circle the wagons and that has to be on our trading radar. The day to day is absolutely insane and difficult (at best) to navigate. However, I will remind you that the more times a level is tested, the weaker it becomes. European traders can tell you first hand that once support is broken, all bets are off. My point here, Minyans, isn't to influence your decision making process. I'm simply reminding you of historical precedence's should you be unaware of them.

I wish I could do more to ease the pressure--I could ask you what you'd call a fish with no eyes but I'm sure the last thing you want to hear is a joke. I will only say that we can't ever lose our sense of humor, Francis, and despite all we've been through, we're still here pluggin' away and attempting to better ourselves. And for that, cookie, you should be proud.

Fare ye well.
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