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Diggin' In

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The breadth is getting worse!

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"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.
position in qqq

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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