Ants and Uncle
We're so sorry Uncle Albert
We're so sorry if we caused you any pain
We're so sorry Uncle Albert
But there's no one left at home
The Minxy grind continues and THE biggest concern on my mind continues to be how obvious these resistance levels are. Almost everywhere you look or listen, traders are all using the very same stop levels. That's a dangerous (and potentially bullish) near-term develelopment and it warrants a discussion as we approach the ripcord levels.
Evidently, I'm not the only person who harbors these feelings. My contacts on the street tell me that a large portion of the bid we're seeing is macro hedge funds tossing in the short-side towel and screaming uncle. Supposedly, they're not huge but they are (were?) leaning that way -- and now they're unwinding that risk. That's lending support to today's tape but, again, once that layer of demand is removed, the supply/demand equilibrium (from a broader perspective) weakens.
Young Boo sauntered into my office with a forlorn look on his puss and I told our furry friend to pick his head up and focus. There are three hours left in today's session and the day is far from over. He smirked, shot Fokker a look, and then asked me what I was gonna do with the lone appendage in the bear costume. I explained to him that while I hate running with the conventional wisdom crowd, discipline dictates adhering to the methodology that's gotten us here. As such, if the NDX pushes through 1100, I'll likely dance naked to tonight's dinner.
While the metaphorical imagery will follow that script, I WILL keep my long vol posture as I feel it'll pay off. My biggest concern, once again, is one of timing. My fear (for Boo) is that if the Minx breaks these high-profile levels, there could be a blow off (final exhaustive rally). That "false" breakout, if and when, will likely cause the most pain for the trading community and, as we know, the Minx likes to travel the path of maximum frustration.
As always, my friends, I hope this finds you with some jingle in your jeans.
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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