Higher prices are my friend!
Reach for the sun, catch hold of the moon.
That ball too heavy, but what can you do.
Reach for the stars, smack into the sky.
You don't want to live but you're chicken to die.
Man oh man--in the immortal words of Tommy Carden, this is wackadoodle doo! I actually had to stand up and walk out of the room for five minutes. This flickering ticks are starting to taunt me and before I traded "just to trade," I wanted to check myself and make sure I was being disciplined. If you've got relatively flat risk, a five minute break from the action always helps to bring perspective.
The bulls are making a push to grind the tape through this morning's highs (830 on the S&P futes) and if you care, bear, one strategy is to fade (read: short) the market using that level as a stop out. It's relatively risky in today's tape as emotions are charged and psychology is pushing the tape around. Still, I wanted to communicate the methodology for those interested in learning about trading styles.
There remains constructive elements nestled in today's muck. The retailers and financials are holding their bid and that must be noted. On the flip side, the semis continue to trade lethargically (on the heels of Intel) and that's weighing on tech. Every trader I speak with is attempting to game the Osama situation and that's a recipe for whippiness. If you're gonna play, cookie, play tight--it's a mine field out there!
The upside band of our much discussed flag formation rests in the mid 830's (S&P) and that's something we must monitor. I'm not sure how much of today's bid is related to short covering or a perceived Bin Laden capture but, regardless, I don't consider today's low to be a suitable foundation for a bullish phase. There's a big difference between true demand and an alleviation of sellers and I'm currently trying to wrap my arms around where we stand.
As I'm figuring it out, I'm staying light and tight. I may, for instance, try some trades like the above mentioned fade (for a schnitz) but I'm not swinging a big bat. I've seen a lot of put selling and call buying today and that is causing me to keep my guard up. As always, this is one Minyan's humble opinion and, like everyone else, I'm bound to be wrong at times.
I'm going to turn my attention to my proteinfest and patiently await Kimmy and the fish. If there's a violent move today and I'm not involved, I'm not gonna stick a fork in my eye. My goal, as you know, is to identify advantageous risk reward profiles and while my "gut" says sell 'em here, I'm looking for more than girth when deploying my capital.
Good luck Minyans--hang tough.
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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