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The Switchback Trail


As Ruby always said, "Think Positive!"


Good morning and welcome back to the happy clam. With yesterday's spirited sprint, the Minx effectively lured technicians into the mix with her close above recent resistance. It was, by all accounts, an impressive showing and her sexy slink has become the talk of the town. Will her last leap clear the way for further follies or will the smitten kittens once again get bitten? Strap yourself in, my friends, for it's Hump Day in Minyanville and it promises to be a wild ride!

Earnings season is chugging right along and the reports (for the most part) have pleasantly surprised the street. In the process, the fundies have assumed a leadership role among our tradable metrics. While visibility is arguably guesswork, the "what-have-you-done-for-me-lately" crowd breathed a sigh and started stamping black tickets. When we factor in yesterday's technical giggle, the giddy psychology and the structural metric that's (seemingly) equity friendly, the obvious question becomes: Who will stop the gains?

It's been a while since the momentum crowd had the mojo and I suppose that question can be answered with another question: Is this time really different? Selling hope and buying despair has been the single best trading strategy over the last three years and unless we HAVE turned the corner, these levels (price and sentiment) will prove to be compelling sales. Clearly, I'm not a buyer of hope but, at the same time, I am a humble enough to understand that, in our business, perception dictates reality.

This is the fifth or sixth sharp lift since the grizzly began and each time it was THE bottom. During each of these sprints, the collective psychology was sure that the worst was over and the fear of losing morphed into a fear of missing. The current combination of complacency and bullishness has an eerily familiar ring to it but investors have turned a deaf ear. For all we've been through, they'd rather see the damage than listen to the warning signs.

That's certainly not to say there can't be bullish phases nestled in the muck and, for those who choose to play it that way, S&P 905 and NDX 1100 (former resistance) offer tight support zone stops. I've received a handful of emails asking why I'm not fully suited up in the bear fur into this lift. My response is that my metaphorical imagery will always be an extension of my profile and, as I'm light and tight, I need to honestly communicate that to my fellow Minyans. While this may very well prove to be a false breakout, an assimilation of the metrics dictated an assertion of discipline consistent with my actions.

It's a new day in the fray so whadaya say -- let's get ready to play. Identify a strategy before stepping onto the field, remove emotion from your process and "trade to win." Over the course of time, the mechanics of the swing will prove to be more valuable than the results of the last at bat. Remember, friends, it's a marathon and not a sprint. Slow and steady wins the race.

Good luck today.

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No positions in stocks mentioned.

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

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.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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