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Eminem Makes Friends

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Who are you calling a dog, dog?

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Snap back to reality, oh there goes gravity
Oh, there goes Rabbit, he choked, he's so mad, but he
Won't give up that easy no, he won't have it, he
Knows his whole back city's ropes, it don't matter

(Eminem)



The Elmerfest hits the wires and the ISM stood out with a weaker than expected reading of 46.2 (vs. exp. 49). I heard whispers as low as 40 but, regardless, this is a soft number. The initial dip (lower) gave way to a quick blip (higher) that triggered some buy stops... and now the Minx is settling in for a new day of trading.

The retailers act relatively heavy (Best Buy (BBY:NYSE)), the banks are holding an early bid, the macro indicators are (marginally) equity positive, breadth is better in the old school (S's over N's) and traders are gunning for buy stops (above yesterday's late session highs). The flow I've seen (thus far) is primarily short-covering but if we've learned anything, it's that reactive traders become emboldened by the price action (either way). Keep an eye on bonds, dawg, as the alligator chatter is starting to circulate.

The key metric as we enter the second quarter is once again psychology. If investors are willing to give companies (and economic numbers) a free pass as a function of war, the "they don't go down on bad news" crowd will get loud. As many traders have (painfully) learned, there's risk in buying (or shorting) something based purely on price action. Remember, we must always respect the price action but we can never defer to it.

What are my directional thoughts? I still get the new lows itch but I'm unsure if there's a trade higher first. As such, I'm gently nibbling on May puts (again) and will look to set up some gamma if the need arises. This next hour or so is important for the daily action and I'm carefully eyeing the breadth, the banks and the semis for short-term guidance.

I'll be back.


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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.

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