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The Ripple Effect

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Put limits on those orders if you're gonna trade the FOMC!

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You who choose to lead must follow
But if you fall you fall alone
If you should stand then who's to guide you?
If I knew the way I would take you home


(Grateful Dead)

It's been a long time since my inbox filled up with emails challenging my acumen but let me assure my fellow Minyans that I am absolutely sure on this one! As a Young Frankenstein aficionado, I'm quite certain that I meant Gene Hackman in my random thoughts and NOT Gene Wilder. While the latter Gene was spectacular, the former Gene gave a brilliant performance as the blind hermit. So, do yourself a favor, Eye-gore, and PUT THE CANDLE BACK!

The Minx continues her roll in the hay as she slinks higher ahead of Elmer. There's no denying that the action is impressive and that fact isn't lost on Boo. I told our resident bear that he's usually early and it's important to incorporate both time and price into his strategy. It's entirely alright to have a view, I explained, but it's equally important to identify the proper vehicle and allow for a margin of error. In other words, he needs to find instruments that are an accurate extension of his view and if it gets to a point where he can no longer trade proactively, he's likely bitten off more risk than he can comfortably chew.

It's been a while since I've had three appendages in a costume and while I'm comfortably dressed, I wanted to make a quick point. Each appendage represents 25% conviction and my overall imagery will dictate my stylistic approach. That doesn't mean I will stand at any one level and draw a line--that would be imprudent and dangerous. I will, however, incorporate that bent into my risk profile and factor it into my methodology. For instance, I've identified defined risk instruments that I want to keep in my portfolio and I will actively trade intraday (when warranted) to augment my exposure. When my posture includes fur, I'll primarily trade from the short side and when the costume includes hoofs and horn, I'll flip that hat around. A'ight?

With that said, I'm balancing my bearish inclinations with the reality that timing, while elusive, remains an essential element of profitability. The bulls are surely frothing now but, keep in mind, they made similar noise during the Razor Burn top (November) and the January pimple (S&P 930/BKX 800). Months later, they were nowhere to be found and investors were left to stare at their screens wondering what went wrong. My point is, you can play this tape anyway you'd like but when the dust settles, you've got to look in the mirror and accept accountability for your own financial decisions. Win, lose or draw, the buck stops with you.

Elmer hits the scene in a few so I'm gonna hop and prep myself for the loony tunes. I don't expect him to cut rates but, hey, I'm simply a squirrel trying to make a nut. As we jiggle higher, the E.T.F buyers are out in force as they figure that if the bears couldn't dent 'em by now, they'll head back to Red Dye Junction. I can't tell you if they're right, my friends, but I've chosen not to bite at the low hanging fruit.

I hope this finds you jingling.

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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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