Happy and SAFE holidays to you!
A quick clarification before we get started. When I asked earlier (in random thoughts) if Dr. Adkins was Jewish, I was simply alluding to the "no carb" aspect of Passover. In complete honestly, I had no idea that he passed away today (from a sidewalk spill) and, as I hope you know, in no way meant any disrespect. It's a spooky coincidence. And I wanted to clarify, and offer sincere condolences to his family on their loss.
Turning our attention back to the tape, the N's over S's is in full effect (the semis are up 5%) and the techs have managed to pull their old school brethren to the party with them. It certainly feels like "all systems go," but as we prepare to enter the long weekend, we've got some decisions to make.
As the NDX tickles her down trendline (NDX 1085) and the S&P eyes the all-important 905 level, traders I speak with are (again) more concerned with missing the rally than they are protecting the downside. I understand why -- I see what you see -- but it's worth (at least) a discussion as we prepare to power down for our three-day respite.
While the path of least resistance is seemingly higher, the VIX is now 30% below it's 200-day moving average. I know we're beating a dead bear with our volatility discussion, but it factors into our process both as a red flag and a potential vehicle. For instance, whether your bullish or bearish, there are better potential risk/reward profiles available as a function of this "anomaly." I know some Minyans don't play with options (and for good reason) but, for those who do, it's worth a look.
As discussed, I kicked the underlying QQQ from our gamma trade (shortly after Philly Fed) and those April 26 puts will likely go out nil. I've got a smattering of (cheapie) puts in a handful of financials and that's how I want to head into the weekend. While discipline dictated the earlier bear appendage stop (I leave one leg in the costume), I continue to keep my right hand up. Do I respect the potential for a rally to the upper end of Tony's range? Sure -- but my risk is defined and it's an extension of my view
I'm admittedly fried after a long earnings and expiration week and, to top it off, I'm starting to feel a little drekky. As the last thing I can afford right now is to get sick, I am gonna spend my second Seder in bed with some warm soup and a good flick. Apologies to cousins Len and Nicole on the late day cancel -- I was VERY much looking forward to celebrating the holiday with your beautiful family.
To all my fellow Minyans, have a happy and safe holiday weekend and we'll pick it up fresh on Monday.
Have a peaceful weekend.
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 firstname.lastname@example.org.
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