Good luck into the close and have a most peaceful night!
She lives on Love Street
Lingers long on Love Street
She has a house and garden
I would like to see what happens
The mad chase continues as the Minx tickles the daily highs and the flow I'm seeing smacks of capitulation. That, in a nutshell, is the fatal flaw with technical analysis: stocks (indices) get "better" at higher levels (and "worse" at lower levels). As we know, that's an intrinsically flawed methodology, but chart work remains a favorite in investing circles and must be respected as a tradable metric.
We've discussed the potential for false breakouts and this current juncture screams with warning signs. The volatility measures, which were depressed and "flashing" last week, continue to coil. While that doesn't matter yet, it likely will with the benefit of time. Further, the bull/bear (due out tomorrow) is sure to illustrate what we already know: The market is chock full of bulls and expectations of higher prices.
Still, if discipline is to truly trump conviction, we must adhere to the tried and true trading process. While I want to (and will) hold my out-of-the-money cheapie puts, my current exposure doesn't warrant an appendage in my metaphorical fur. I've admittedly been doing less recently and, as I strive to make my posture an extension of my risk profile, I must be consistent and honest with my fellow Minyans. As such, I'll be walking home tonight naked (sans costumes).
While I remain steadfast in my big picture beliefs, our goal has always been to view that big picture as a series of little pictures. As such, our focus now shifts to the intermediate resistance that resides above. The great debate will surely rage and, as a function of this recent rally, it'll be "easy" to bite the forbidden fruit. I can't (and will never) tell you what to do but I will offer that there will likely be lower prices to add exposure should you choose to do so.
Tonight's earning's parade brings us Amgen (AMGN:Nasdaq), Beazer Homes (BZH:NYSE), Corning (GLW:NYSE), eBay (EBAY:Nasdaq), Lattice Semiconductor (LSCC:Nasdaq), PeopleSoft (PSFT:Nasdaq), RF Micro Devices (RFMD:Nasdaq) and Vitesse Semiconductor (VTSS:Nasdaq) (among others) while tomorrow morning ushers in AOL (AOL:NYSE), AT&T (T:NYSE), Bell South (BLS:NYSE), BJ Services (BJS:NYSE), Boeing (BA:NYSE), Cardinal Health (CAH:NYSE), Eastman Kodak (EK:NYSE), Hilton Hotels (HLT:NYSE), Kulicke and Soffa (KLIC:Nasdaq), Lucent (LU:NYSE), MBNA (KRB:NYSE), Nextel (NXTL:Nasdaq) and Xerox (XRX:NYSE).
Monsieur Beeks will also swing by with the beige book and with the current mania (for lack of a better word), we'll need to be extra sensitive to the economic data.
These are wild times indeed and it's not for the faint at heart. Remove emotion as we edge towards the closing bell and make educated and disciplined decisions that are an extension of your view. There's a tendency to beat ourselves up in this business but, as we know, that's wasted energy. Do the best you can -- and then be the best you can. At the end of the day, that's all you can ever ask for.
Have a peaceful night.
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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