Dog Day Afternoon
Hey Toddo--the best fades are the hardest fades!!
Rolling up the street smoking Boo Boo
Sippin' on Gin and Juice
With my mind on my money and my money on my mind
(Snoop Doggy Dogg)
I suppose every dog has it's day and, thus far, today is Hoofy's time to shine. After the initial fade this morning, he really hasn't looked back and is now setting his sights on the next areas of resistance. The face rubs and deep sighs are frequent today but that's to be expected. These are tricky times and, as we've been saying, nobody can outthink the Minx on a consistent basis.
I'm attempting to remain as objective as possible but I can't shake the feeling that this is a vicious bear market head fake. I see the SOX breakout, I'm acutely aware of the action in our macro indicators and I've asked myself more than once if this action, on heavy volume, is "telling" us something. Should I be listening more carefully? Perhaps--the short side certainly isn't a novel concept these days. Still, I don't like the "bottom" we've put in and I think Boo will look back at these prices and smile.
How sure am I? Sure enough to try some defined risk puts (out to April) and humble enough to know I might be wrong. I am simply attempting to use prices to our advantage and find an advantageous risk/reward . When prices were collapsing and the bears were swarming, we were very careful not to press the short side. As the tape rips higher and performance anxiety sets in, I want to scale into back into some defined downside risk.
There remains huge geopolitical risk to both sides of the tape and, as such, we've got to be careful. As we spike to a more formidable resistance (S&P 830-835, NDX 1020 and BKX 700) however, my inclination is to slip that other appendage into my bear costume. This makes 50% conviction and if (big if) we power through the current levels, I'll stop the fur out and move to the sidelines.
Good luck into the close.
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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