Daisy, those were AWESOME brownies!
I'll run in the rain till I'm breathless
When I'm breathless I'll run till I drop, hey
The thoughts of a fool's kind of careless
I'm just a fool waiting on the wrong block
Alright Fokker, I know you're excited about last night's big win but PLEASE, this is a no-snorting zone! One snort is an aberration, two snorts may be a coincidence but three snorts? That's a trend, kid, and I cannot condone snorting during the trading day. Keep it up and I'm gonna change your nickname to Wilbur!
Today is one of those days when we'll likely look back and say "yup, I knew it." If we rally, Hoofy will point to the traction in the banks, the ability to hold the gaps (S&P and NDX) and Ding Dong chatter (Saddam). If we break, Boo will smugly identify the semis, breadth and macro indicators as the "obvious" reason we sold off. All the while, Sammy is slinking down the middle of the road sucking volatility out of option premium. What a snake!
What am I doing? I'm "trading around" my May puts ever so slightly (short bias) and have plenty of dry powder (should I need it) for higher fades. While we must always stay sharp while monitoring risk, there are days that beg doing a bit less until a clearer edge emerges. Today is such a day and I'm attempting to use my time productively and effectively.
The zillion dollar question for this tape is one of psychology and sentiment: When will the lethargic economy and muted fundies start mattering again? When, if ever, will the market begin to price in further risk premium? What happens if we get a dose of upside validation? What's the path of maximum frustration?
Does size matter?
These are all questions that mull around in my crowded keppe as I attempt to stay a step ahead of the curve. There are plenty of people who can assimilate what has happened but, as you know, profitability lies in the path ahead. That's our ultimate goal as traders: to proactively position ourselves and use prices to our advantage. It's certainly easier said than done, but that remains our mission (should we choose to accept it).
I'm not gonna lie, I sometimes fall prey to the sexy sirens that sing all session. What we must do, however, is catch ourselves when we start becoming junkie monkeys. I've said it before and I'll say it again -- our ability not to trade will be as important as our trading ability in the years ahead. Death by 1000 paper cuts is a painful way to bleed performance. Pick your spots and play to win -- and when you don't see it, stay off the field.
That's about it, my friends, as another day at the office slowly skates by. While I have you, I want to take a moment to offer my heartfelt thanks to those Minyans who have made donations to The Ruby Peck Foundation for Children's Charity. Of all the things we are doing, this is the effort for which I am most proud. It not only offers a vehicle for helping the kids, it allows me to think of my grandfather often. Each time I do, his spirit resonates throughout my entire body -- and it's the best feeling in the world.
As always, I hope this finds you well.
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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