I'm not getting any help from Europe. Shocker!
Good morning and welcome to the jagged edge. Boo took the bulls by the horns yesterday and dared them to score a gore. They certainly had their shot--tech traded dry all day, the semis were flirting with Snapper and the bears were truly scared. When push came to shove, however, the supply in the financials and the fugly breadth were too much for Hoofy to shoulder and the Minx slinked lower into the close. Can the bovine turn the tide and take back the baton or will ursine unravel their bullish brethren with another beat down? Hold onto your helmets, fellow Minyans, it's Hump Day in Minyanville and the games are set to begin!
Yesterday's slippage brought our beloved tape to a most interesting juncture. S&P 820 is an area of congestion (support), the NDX closed right on "a" trendline (support), BKX 700ish is the closing lows for February (support) and SOX 280 is a line in the sand. To add extra spice to the mix, the last ten times the TRIN closed above three (as it did yesterday), it led to a short-term pop (thanks Jason) and that's emboldening some technical types. On the other side of the coin (literally), we're getting stochastic sell signals in select bellwethers (SOX. GE), there's tranched resistance layered above (S&P 850, 870) and corporate invisibility is running rampant. Confused? Wait--it gets better.
Every player in the world trying to game the war so they can define conventional wisdom and take the other side of the trade. If there wasn't so much at stake, it would actually be comical. Think about it--everyone's trying to figure out what everyone else is thinking so they can trade a catalyst that nobody can see. Huh? It's like playing tag with a bipolar ghost!
I surely don't have the answer--I'm not sure that anybody does--but I will argue that identifying the proper methodology is half the battle. Let's put our trading metrics aside for a moment and think of your investment goals, relative edge, risk tolerance and time horizon. What do you hope to gain? How does your thought process differ from a coin toss? Can you afford to lose the money your putting on the table? Are you a trader or are you investing for the future? Once you've answered these questions, the goal is to find a functional application of your process (while allowing for a margin of error).
One of my biggest challenges in writing this column is to offer salient content to the wide array of Minyanship. What I've done, and what I'll continue to do, is share my process with hopes that it adds value to yours. I make my living in the guts of the tape using options, levels, oscillators and a bevy of other tools. That's a style that "works" for me--you must find a method that works for you. Our goal is to better your understanding of the market and provide information that helps you to make more educated decisions. Give a Minyan a fish and he'll eat today. Teach a Minyan to fish and they'll eat forever.
One step at a time, friends, as we try to find some solid footing. The mind grind continues to continue and today promises to be nutty . While I unwound some puts into yesterday's close, I remain skewed to the short side both in exposure and approach. I'm trading much smaller than usual as a function of the unknowns in our midst but, again, I'm not comfortable that we've put in a tradable low. Could they bounce today? Sure-if the bulls are gonna step up, today's likely the day. However, I still sense that higher prices will prove to be a good fade (read: sale).
How sure am I? Sure enough to have one foot in my bear costume and some defined risk April puts on my sheets--and humble enough to know that I'm just a pawn in this game trying to find my way to the other side of the board. Play smart, play well and no matter what happens, cookie, remember to think positive.
Good luck today.
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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