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Mad Love

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The critters in a steak house? Toddo, how could you?

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Don't you love her ways
Tell me what you say
Don't ya love her
As she's walkin' out the door


(Doors)


The morning cuts are gettin' nutz as we stumble through the trading guts. It stands to reason that a whippy week would end with a freak and that's exactly what we've seen. A morning rip, a sharp red dip and tape that now is trying to grip. The action has served to reinforce an important (and often painful) lesson: If you're reactive rather than proactive (bullish up, bearish down), you'll likely be eating dollops of whipped cream this morning.

I've got back-to-back lunch meetings today (although I'm fasting through the first) but I wanted to get some quick vibes out to the News & Views. I will again stress that if you're an active Minyan, the Buzz & Banter is a must as it allows for dynamic observations from Minyanville's finest. I'm a trader--not a salesman--but I wanted to stress this point for those who are unfamiliar with the "other side" of the Gazette.

In Minxville, it feels kinda squeezy (still) despite the fugly Nazz breadth and the Pedro'd Red SOX. We mused this morning that the CPI, while far from snazzy, wasn't the disaster that some bears were hoping for. I still haven't figured out the BLS math but perception is reality in our business and the whispers were higher. The bigger question, in my mind, is when the broader (and VERY disturbing) macro landscape will take the baton from the day-to-day focus. It's more likely a process than a point but I wanted to bring it to your attention with a mention.

Does it feel as if lotsa folks are calling for a bounce? I suppose...and while it is quite possible, we should remember the mirror's image last year when the stars were constantly aligning for a trounce. If the difference between mistakes and lessons is the ability to learn from them, the point we should carry forward is that indicators and guides will always work until they don't. That is precisely why discipline is the constant thread of any trading strategy.

The obvious rip-cord level is the weekly lows as a breach would punch a hole in the "meaningful reversal" thesis. S&P 1077ish and NDX 1380ish are the key zones to watch and IF we slip through, there could be a hairy close (into the weekend unknown). Remember, Minyans, there's a ton of negative gamma as a funtion of next week's expiry. That means the highs will be higher...but the lows could be fugly.

As always, I hope this finds you well.


R.P.

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