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Pulp Squeezage

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If we can hold today's lows, I've still got a chance

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"The path of the righteous bull is beset on all sides by the inequities of the selfish and the tyranny of evil bears. Blessed is he, who in the name of charity and good will, shepherds his hoofs through the valley of darkness, for he is truly his brother's keeper and the finder of lost profits. And I will strike down upon thee with great vengeance and furious anger those who would attempt to poison and destroy my bovine. And you will know my name is Hoofy when I lay my vengeance upon thee!"

--Jules Winnfield, Pulp Fiction



Holy air pocket! For those of you who blinked or were on a bathroom run (Fokker!), the Minx hiccupped and sliced 10 handles off of the futures. It "felt" like news came out but despite my best efforts to find a catalyst, I've been unable to do so. This just reinforces the concept that this is, in fact, one of the more dangerous tapes (both ways) and we must remain diligent in our risk management efforts.

Fellow Minyan Brian Shannon sent me a chart of the Nasdaq Comp and as I don't usually monitor this index (I watch the NDX), I was unaware of the importance of COMP 1355. It's the intersection of the 200-day moving average and a trendline from previous highs. Interestingly enough, it's also an area that we pretty much stalled at today. Hmm...more levels! I feel like a carpenter, Karen!

Senior Minyan John Succo also forwarded me a statistic showing that short interest as a percentage of NYSE shares fell appreciably in the last few sessions. That makes sense intuitively but I will offer that I rarely look at short volume statistics. It's my opinion that the proliferation of derivatives and convertibles has skewed these numbers significantly. However, the statistic he sent showed an egregious disconnect and I wanted to pass it along.

The bloom has come off today's rose as the bulls take some profits and the tenor has shifted once again. Man, I thought I was moody! The lethargy in the semiconductor space is lending to the S's over N's dichotomy and it once again begs the question: will the gap be narrowed? As it stands, the NDX is 200 handles higher than the S&P and it's starting to act as if the S's will relatively outperform the N's. While I don't have on the "pairs trade," per se, I am looking to the Nazz for shorts and, when I'm feeling it, the S's for longs. Somebody tell cousin Richard!

Despite the pullback, the NYSE breadth and dollar continue to hang tough while the oil spill continues. I'm admittedly a scared bear but, again, defining your risk profile via options and/or levels removes emotion from the trading process. I know many of you don't have the ability to trade options and this is in no way a recommendation to do so. I'm simply sharing my process with the hope that it adds to yours.

Finally, I'd be remiss if I didn't take the time to mention how insanely cool the Minyanville lady tees are. If you're a female Minyan, this has to be part of your spring collection. If you're a manly Minyan, do your honey a solid and spring for the tee! 10% of all proceeds from Harrison's Department Store will be donated to The Ruby Foundation of Children's Education and that's cool beans!

Watch the intraday lows in both the S&P and NDX as the next areas of support and keep your head up--only three hours to go. Good luck!
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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.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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