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Mind Games

By

Despite my privileged upbringing, I'm actually quite well-balanced. I have a chip on both shoulders.

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"I've gotten used to ignoring them and I think, as a result, they've kind of given up on me. I think that's what it's like with all our dreams and our nightmares, Martin, we've got to keep feeding them for them to stay alive."

--Professor John Nash, A Beautiful Mind



The afternoon squall continues to crawl as the critters climb the proverbial wall. It's been a long week on many levels and I, for one, am looking forward to our requisite two day respite. While we've surely earned the down time, I'll ask that you stay on top of your game as we edge ahead. For if nothing else, the action into today's close (and at these uber-important technical levels) will go a long way in crafting the collective psychology.

Despite the down, I mean up, I mean down, I mean up action, the net/net results have been rather muted. Yes, the banks are screaming "look at me" and the volatility in the other asset classes is pronounced. Still, as I bang on my keyboard, the pennant race continues. The techs (lower highs, floor at NDX 1450-60) and S&P (higher lows, ceiling at S&P 1160) are moving in opposite directions and more likely than not, there's only gonna be one winner.

While perception is reality, Professor, as the stagflation signs are becoming increasingly clear. Think about this for a second--commodity prices (cost of goods) are rising, the purchasing power of the dollar is (trending) lower, folks are out of work and the stimulus will only last so much longer. The bears, who are clearly in mumble mode, will argue that despite the "hand" in the market (and the ability to make economic reports disappear), Elmer can't manufacture jobs. Hence the dichotomy and the ever-increasing disconnect between what is and what must be.

You can color me furry on the big picture--without question--but the near term tug-o-war is dicier than a casino floor. The rule of thumb when initiating risk is to assimilate the trading metrics and make bigger bets when the ducks align. As it stands, our daily tells are far from clear--there are positives, negatives, support, resistances, volatility and crosscurrents. That doesn't mean you can't play (for a breakout or a failure), but be sure to respect the two-sided elements in play.

For whatever reason, today's trading smells fishy to me and there's no sushi in sight. Whenever I'm unsure, I do a little less (or nothing at all) until a discernable edge emerges. There's no shame in that, my friends, and I'd much rather hand sit than blindly bet. Remember, pride and boredom are two of the most costly emotions when sitting at a trading desk. Don't force it, just let the mojo evolve. Kinda like the breathing through your eyelids thing, minxy style.

Finally, congrats (for the third time) to Minyan Mattison Reinecke in Italy for correctly identifying Cannonball Run as the answer to today's trivia. I'm not sure if Terrapin Matt feels guilty (overseas shipping) but he just placed a sizeable order in Spirited Sweets. I can't blame him (they're kick ass cookies) but seriously, my friend, you really should have better eating habits! Jeez!

I'm gonna hop and ready for the final flurry. As always, I hope this finds you well and coining some serious shekels.


R.P.
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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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