Tuesdays with Turtles
Boo tried to hogtie me in the broom closet yesterday--that dope--but I'm back and ready to defend S&P 850-860!
The sailor gave at least a try
The soldier being much too wise
Strategy was his strength
And not disaster
Good morning and welcome back to the Minxy Moxie. Sir Isaac Booton descended upon Minyanville yesterday and brought the bulls back to earth. I suppose it was inevitable -- there's an ebb to every flow -- but it's clear that Hoofy is emboldened by the recent rippage and he's not satisfied yet. Will the bodacious bovine bite back and defend his turf or can the ursine uglies unglue the upside and upset the apple cart? It's a tricky Tuesday in Minyanville, boys and girls, so pour yourself an extra cup of Joe and roll up your sleeves -- the games are set to begin!
While yesterday's meltage was rather meaty, the mood on the street was one of confidence (complacency?). The volatility (fear) measures barely budged, the remaining shorts were quick to cover and the "dip" was considered a necessary evil. Sure enough, as the closing bell tolled in the background, our benchmark averages found their respective support areas and nuzzled up for the night. How cute!
As we prepare for the day ahead, pay particular attention to S&P 850-860. That's a zone that's been circled by critters of all shapes and sizes as an "inflection point." It stands to reason that the bulls made an overnight stand there (first test), particularly with the quarter's end looming on the calendar. After a surge like we've seen, a complete and immediate reversal is a rare occurrence. Typically, hope is weeded out through a series of bounces as dip buyers (and short coverers) attempt to use weakness to their advantage.
I continue to sense that there's a downside surprise coming but timing, as always, remains the elusive element. A "bounce" in here wouldn't shock me -- perception is reality in the marketplace and if enough players believe the tape will lift, it'll likely become self-fulfilling. That, in a nutshell, is why I unwound a chunk of exposure into yesterday's meltage. I have one leg in my bear costume, defined risk puts on my sheets and the balance to trade the tape both ways.
The style YOU choose to employ is a function of your view, time horizon and risk profile. Bulls will "trade from the long side" and use dips to buy, while bears will likely "trade from the short side" and use bounces to make sales. I can't tell you which methodology is appropriate for you, but I will offer that mapping out a strategy before you step on the field will help remove uncertainty from your process. The goal, as always, is to use prices to your advantage and trade proactively.
The tape remains thin and whippy so please be careful and, when in doubt, trade "in between." Emotion, whether it's performance anxiety or buyer's remorse, only serves to cloud the process and suck negative energy into the mix. If there's one constant we must all strive for, regardless of posture, it's to think positive. We're trading a bear market in the middle of a war -- think about it -- the last thing we need is to get down on ourselves.
Good luck today.
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