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The Unforgiving Minx


It's now or never parnta!


"Look son, being a good shot, being quick with a pistol, that don't do no harm, but it don't mean much next to being cool-headed. A man who will keep his head and not get rattled under fire, like as not, he'll kill ya. It ain't so easy to shoot a man anyhow, especially if the son-of-a-bitch is shootin' back at you."

Little Bill Daggett, Sheriff of Big Whiskey Wyoming, Unforgiven

Good morning and welcome to tumbleweed trading. Bandit Boo rode into town yesterday with guns a blazing and threatened to ride rough shot over the bulls. Sheriff Hoofy and his practical posse defended the Alamo to the best of their ability and circled their wagons around support. They're hope was that the Calvary would emerge in the form of an upbeat Intel update, "good" news from Lil' George or stronger than expected payroll data. Unfortunately, the first two bullets misfired, so to speak, and the bulls need Hoss Beeks to gallop in and save the day. Will Hoofs ride off into the sunset with Daisy and milk the upside or will Boo string 'em up and let him twist? It's a gunfight at the MV corral and the shootin's about to begin, so saddle up and let's punch some doggies!

Last night, I listened intently to our President address the nation. As I sat there and let the sobering reality set it, I found myself watching the man and looking for clarity and guidance. A few things caught my attention. First, for the most part, he spoke like a man who's mind was made up and was crystal clear that he wants--but doesn't need--U.N approval to attack Iraq. That accomplished one thing (a defined time frame) but raises many issues. How will the the United States be viewed by the world if we (basically) denounce the U.N? What are the economic and, more importantly, retaliatory ramifications of a unilateral attack? How do we root out terrorism and ensure our safety without dividing global interests?

This isn't a political commentary and my point isn't to assign or remove blame. I'm genuinely trying to grasp how the decisions our government is making will affect our lives. As a fund manager, I have a fiduciary responsibility to my investors to weigh any potential recourse. As a human, I've spent a lot of time wondering if future generations will ever be the same. The recent political procces and the posturing of various governments has almost seemed surreal at times. Now, as the situation "comes to a head," it's forcing us all to underderstand the gravity of this moment.

From a tactical trading perspective, we've been focusing on the technicals because it's the most tangible of our metrics. Overnight, the Japansese Nikkei broke those five bottoms we've been discussing, the German DAX and French CAC are now trading fimly below October's lows and the London FTSE is testing that level now. Stateside, the BKX and S&P are a kitten's whisker away from a downside resolution of our flag patterns and, yes, that's huge. The Minx is fragile but, with that said, it's impossible and imprudent to make a huge bet because there are SO many balls in the air. Emotions are high, traders are itchy and psychology is driving the price action. Real risks remain to both sides of the market.

As you know, my sense is that we've yet to see a bottom that can provide a foundation of a sustainable bullish phase. While I've chosen the stylistic approach of trading from the short side, I've tightened up my risk parameters in a big way. The last thing we want is to get "caught" and give back our hard earned profits. That's not to say I haven't been playing (I have), but I've been defining my risk via intraday stops, when applicable, and kept my overnight risk to a minimum.

The goal, when trading, is to use prices to your advantage and identify advantageous risk/reward scenarios. That's admittedly difficult in this tape and recognizing that is the first step towards prudent capital management. Will we miss moves at time? Absolutely--nobody catches every play and anyone who tells you differently is pulling you leg. I will remind you that opportunities are made up easier than losses and at the end of the year we're measured by wins minus losses. Baby steps may take longer to get there, but we're less likely to trip as we find our way.

There are no easy answers, my friends, and the truth of the matter is that we've got two choices. We can ignore our finances and blindly hope that the market will eventually get "better" or we can dive into the muck and take a more proactive role in our decision making process. That, in a nutshell, is why we created Minyanville and why we'll continue our efforts in that regard. This is quite possibly the toughest environment we've ever experienced and it promises to get worse before it gets better. With a little luck, a lot of discipline and a strong support system, we'll find our way to better times. Together.

Good luck today.

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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

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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