A Day of Loss
Rest easy, Michael.
Well I think about life, we don't know
Whether it all could be in vain
Look through time, it's for sure
It's the greatest gift to man
Good afternoon Minyans, and apologies for the late start today. I was paying respects to an extraordinary young man, Michael Beier, who, after a long and courageous struggle, succumbed to ALS (Lou Gehrig's disease). Michael was a respected voice on Wall Street, a tremendous trader, a loving friend and a super guy. He was taken before his time, at 39, and is survived by his wife and two young children. To learn more about Michael and support this most worthy cause, please check out http://www.wingsoverwallstreet.org .
It's been a powerful morning. As I sat and listened to the tributes and felt the pain of his family and friends, I was rocked with perspective. What we do all day -- speculation and investment -- can consume us at times. I'm not rationalizing or belittling the process as I understand it's importance. I simply refuse to let bad trades or missed opportunities impact my soul when there is so much more to life -- including life itself.
With that said, I powered up my systems to find that the confident rally from this morning had petered out a bit. The first thing my eyes migrated towards was the dollar, which remains a potential weak link in the equity utopia. Not far behind, the relative lethargy in the financials and energy vs. the dry retailers and semis jumped out (I have my screens sorted by industry group). Finally, I noted the S&P 911 support zone that so many traders seem to be focusing on.
I've been struggling with the timing issues of this tape and, as a function of that, took a step back last week and did more observing than trading. As I assimilate my metric base -- the technicals, fundies, psychology and structural -- it's hard to argue against a constructive backdrop. That contrasts with my view -- that stocks are vulnerable -- and that's been a source of internal contention. There's no shame in admitting it's hard -- all traders go through it at times -- the key is to persevere so you can pounce when the god's smile.
The technical levels below that served as resistance -- S&P 905/880 and NDX 1100/1080 -- are the next areas of support and that should be on all our radars. Above, S&P 1025-1030, Dow Jones 8521 and 1125ish should all offer some resistance. The tone and tenor is constructive, that's for sure, but with so many positives being priced into the market -- including the (cough) second half recovery, we must remain conscious of the two-sided risk.
With that said, I continue to feel that the "shock value" is to the downside as the widespread bullishness/complacency is ripe for an oops. How am I approaching the Minx? With a defined risk and respectful approach. I have a handful of JUNE out-of-the-money puts on (tech, financials, retail) and I'm trading around them. I'm also itching to slip into my metaphorical bear costume, so you know, and will continue to keep it nearby.
Minyanville is about learning and educating and, as you'll find, that will broaden beyond finance. I know that many of you are looking for financial inputs and that will never change. However, there's much more to life and our goal is to grow with you and better the lives of children in the process. With a little luck and a lot of heart, we'll get there. One step at a time.
As always, I hope this finds you well.
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