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Play like a Minyan!


Welcome back my friends
To the show that never ends
We're so glad you could attend
Come inside, come inside

(Emerson Lake & Palmer)

Good morning and welcome back to the main stage. With yesterday's virtuoso performance, the Minx succeeded in frustrating traders of all shapes and sizes. It wasn't so much where she ended up--it was more a matter of how she got there. After wearing all three faces of Eve before the opening bell, the moody mindscrub began in earnest. When it was all said and done, she gave the shorts a firm hug and ended Hump Day with marginal gains and a sly grin. Will today's session offer an upside encore for the beleaguered bulls or will the curtains be dropped harshly on Hoofy's head? Please find your seats, Minyans, as the lights are flickering and the critters are about to take center stage. It promises to be a really great show!

One of the hardest aspects of sitting in front of our screens all day is knowing when to pull the trigger and commit capital. I've long said that our ability not to trade will prove to be as valuable as our trading ability and, inherent in that notion is the fact that we will, at times, miss moves. I've been doing this for a long time and can tell you, with absolute certainty, that any trader worth his/her salt is as competitive as the day is long. Thus, it's counter-intuitive to think that we can patiently watch while money changes hands and profits are being made. Ironically, it is that exact discipline that will differentiate us from our peers and enable us to stay in the game.

I'd be lying if I told you I was immune to the daily sirens. When I strap myself to my turret in the morning, I immerse myself in the flickering ticks and attempt to digest the ever-changing puzzle that is this market. More often than not, however, our vision is clouded by the incessant noise that fills each day. It's not enough to know what matters--we must also weed out what doesn't matter and remove that muck from our windshields. The purist would argue that markets are efficient and, ultimately, I agree. However, the path to efficiency is littered with temptation, falsehood and treachery and we've got to be very careful where we step if we're to arrive safely at our destination.

I make these points because the market has (shockingly) arrived at yet another critical juncture. As we begin our flirtation with the October lows, there are vicious agendas in play and that will (often) mask the true message of the market. I've been relatively consistent in my belief that these levels "need" to be taken out before a sustainable rally emerges. That's what I "think," mind you, and by no means does that mean it's right. With each test, however, another layer of support is removed and one quick glance of the recent overseas action illustrates the caveat of multiple bottoms.

With that said, history is littered with smart traders who confused conviction with stubbornness and we must be very careful to make that distinction. In my optimal trading scenario, the market will violate these levels and wring hope out of the equation. That would begin to line up the intermediate ducks, establish a downside disconnect and provide a despair that is truly fadable. That would be the perfect precursor to a bullish phase--but that also may be too "easy." And if we've learned anything is this bear market, it's that nothing is easy.

In an attempt to view the big picture as a series of little pictures, I'll walk through our trading levels in the next post. I just wanted to provide an overview of what I was thinking and, perhaps more importantly, stress the necessity of patience and discipline. There are thousands of nuances and if we attempt to game each and every one, we're gonna burn a hole in our mojo (not to mention our pockets). Identify a comfortable risk profile, establish a suitable horizon and don't paint yourself into a corner. We don't need to be heroes--we just need to be happy.

Good luck today.
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