The Sunset Grill
May peace be with you!
"Was that seat hot or what? I feel like a Whopper. Turn me over, I'm done and ready. I'm afraid to look at my ass. There'll be grill marks!"
--Del Griffith, Planes, Trains & Automobiles
The afternoon wiggle continues to giggle as the ticks flick quicker and the screens all squiggle. The talk on the Street continues to swirl back to Elmer and his tip tap toe dance this morning. I, for one, can't shake the image of our bespeckled friend walkin' a tightrope in the middle of a perfect financial storm. Every time a gust blows, he's forced to balance on one leg while simultaneously assuring us that all is well in the world. If wishes were knishes...
Today's price action was clouded by the pressy bets into yesterday's close. We noted the multiple technical breaches (that occurred thisquick) and the hedge fund hot potato was in full effect as thy closing bell tolled. Semis, cyclicals, small caps, drugs--it was a friggin' furry free for all! When they didn't go down this morning (and snuck back to the other sides of those levels), discipline begged unwinding some of that exposure and that's what we're seeing now.
Are we outa the woods? Doubtful, and while we must respect that a certain "higher rate" contingency has emerged (bullish from a contrarian standpoint), we must also remember that prevailing sentiment (as measured by today's Investor's Intelligence poll) still has us trading in a giddy city (bearish implications). From 40,000 feet, I have little doubt that we're watching a horror movie. As we focus on the path (rather than the destination), it's not as cut and dry.
Brian Reynolds has been superb in his analysis (for as long as I've read him) and he maps out a few different scenarios in his morning missive. I urge you to spend some time learning the inter-relationship between stocks and bonds as we'll increasingly rely on them as a forward guide. If you're focusing purely on equities and ignoring the other asset classes, it's akin to boxing with one hand tied behind your back. The more you know, the better you'll be able to make informed and lucid decisions. That is, after all, why we created Minyanville and we encourage you to ask questions if you don't understand.
Speaking of other asset classes, the outsized moves continue as crude came off its sugar rush (-3%) and the metals are testing our collective, uh, mettle. I dipped my toe into silver this morning, established a partial position and will look to add as a function of price. It's easy to say wanna buy something at $6.50 when it's trading at $8+ but a tad dicier when it finally arrives at your level. Invariably, there is always a reason for the rhyme but I'm trying to use the smelting to my advantage. I may be dead wrong--and I don't share this as advice--but I'm a big boy and will live with my choices.
We've get a slew of overnight news--more earnings than you can shake at--and a triple shot of Fed jaw boning tomorrow. And despite today's respite, there's a whole heckuva lotta technical cracks in the foundation. I covered up most of my equity risk today (flat delta, some gamma) and have choked up on the bat as I try to hit for average rather than power. You always wanna adapt your stance to the Minxy pitcher and there's a whole lotta fork balls (and forked tongues) starin' down at us from the mound of muck.
Finally, and this is without a doubt the most important thing I have to say, please join me in sending white light and good vibes to 3 year old Jackson Reamer. Scott and Meg are trying a new medicine for young Jackson and I wanna make sure that we muster up all the positive energy we can and laser beam it to Denver, Colorado. And if you're bummin' out about not making more or not losin' less, please get over it and keep it in perspective.
Fare ye well into the bell.
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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