Trading with the Baldies!
Have a peaceful night -- and warm thoughts to our troops!
"It's a shame to see kids beatin' each other's brains out, especially when there's no financial advantage. "
--Chubby Galasso, The Wanderers
You want to hear a really cool little trivia tidbit? Tony Dwyer, affectionately known in Minyan circles as Snoop Tone, was cast as the original Terror in the 1979 flick, The Wanderers. As luck would have it, a scheduling conflict prevented him from completing his acting obligation and the role was given to somebody else. Hey Snoop, I've got one thing to say to you -- Don't mess with the Wongs!
The traders I speak with are all putting corks on their forks right now as the angst level is at DEFCON levels. I've been searching high and low for value added to pass along and I was about to point your attention to the intraday charts in the S&P and NDX. They were in a defined pattern of higher highs and higher lows (the opposite of yesterday) but just as I starting tickling the keyboard, POOF! goes the pattern.
Fokker, in his leather jacket and greasy hair, was befuddled before as I was engaged in a spirited conversation -- with myself! "Self," I said, "You see the reverse head and shoulders, you can sense the underlying bid and you can feel the performance anxiety. Why, then, do you still have a leg in your metaphorical fur? What are you, some kinda shmuck?"
I explained to myself that my ducks are quacking and even though I can't see them (yet), I know that they're floating around. The Volatility Index, or VIX, is under 30, the financials are extended and there's a ton of hope built into the market. That's been a recipe for slippage in the past and even if I'm unsure of the timing, I want to have those May puts on my sheets -- and if I have that exposure in my book, I've gotta be consistent with my fellow Minyans.
Taking a quick step back, I wanted to touch on a question from the readership regarding fixed income. I'll be the first to tell you that I'm not a bond guy but I DO monitor them and factor their action into my process. Brian's done a surreal job of identifying the bond-to-stock trade and he's been white hot. I (humbly) agree with him that bonds have downside -- makes sense -- but what's beginning to intrigue me is the failure of both bonds AND stocks (if for only that nobody is talking about it).
The ultimate tell that we could be in store for the double whammy? That's right -- the dollar. You should have the DXY (dollar index) on your screen no matter what asset class you're trading. It's not today's business, but it's something to file away in the back of your business mind.
That's about it, Mon Frere, as we round third and chug towards home. I'm gonna hop to dinner with one leg in my metaphorical fur (25% conviction on the short side) and a National Championship on my mind. I'll tell ya, I've been a sports nut my entire life and I've never experienced a thrill like I did last night. The coolest part? My brother's alma matter won it last year (fear the turtle!) and I think he wanted this for me as much as I did. Nice!
Earning's season officially kicks off tomorrow with Yahoo! (YHOO:Nasdaq) so take tonight and do something fun. As my good friend Waximus reminds me daily, it's easy to preach balance and perspective but another thing to live it. Sage advice from an elder statesman! It's easy to get caught up in the muck and forget why we work but that's alright. We can trip... we just musn't fall.
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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