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One World

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Watch those macro indicators, Minyans--crude and gold is lower while the dollar is firm.

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Is it getting better
Or do you feel the same?
Will it make it easier on you now?
You got someone to blame?


(U2)


I suppose it's fitting that in this Dicken's of a market, a tale of two tapes has emerged. On one side of the fence, Boo is tuggin' at the tape with a slippy ORCL and some sloppy semis. On the other side, Hoofy is fighting back with firmer financials and a stiff upper lip. I know good fences make good neighbors but this is nuts!

A quick check of the morning breadth confirms what our eyes are telling us--the guts of the Nazz aren't as snazzy as their old school counterparts. I suppose that's to be expected after their relative outperformance but it's worth noting anyway. I continue to believe that the disparity between the two sectors will narrow (over time) and the S's will relatively outperform. Something to watch as we find our way.

The Institutional Investor sentiment figures were released this morning and--shocker--the number of bulls increased substantially (46.6 vs. 39.8). That jibes with the inputs I'm getting from the option desks who tell me that the short base is roughly a two on a scale of 1-10. Clearly, that's only half the issue as the current dynamic could best be described as a long squeeze. With quarter end looming and performance anxiety everywhere, the higher prices are sucking in fresh money. Again, that's potentially self-fulfilling in the short term but creates serious issues if, in fact, the tape turns.

I came into today with three appendages in my metaphorical bear costume (75% conviction on the short side) and I'm staying dressed for the time being. My two main concerns for Boo remain the potential for psychology (and potentially expiration) to exacerbate the volatility and, more importantly, the timing of his execution. However, with a smattering of May paper and the ability to "trade around" my core exposure, I'm dancing that waltz for now.

Will the first bombs spike the tape? I honestly don't know--that's a tough call. My gut says "sell the news" and my instincts tell me that this endeavor wont be as easy as some quick strikes and high fives. With that said, please don't confuse my posture with anything other than an assimilation of the risks. I've seen enough death to last me 10 lifetimes and, trust me, I'm not "rooting" for bad things to happen. As a risk manager, however, I must appreciate that potential--for better or for worse.

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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