Scrabble and Ketchup!
Editor's Note: We had some system issues at MVHQ this morning (our apologies) and wanted to share the vibe from the Buzz & Banter. Thanks kindly for your understanding as we edge through our office move.
It's been a hairy morning in the hallowed halls as we experienced a systems meltdown at Critter Central. I'm "assured" that it's related to our imminent move to new digs but that's not acceptable. Either way, I scrambled the jets and hit the home digs--only to be given the all-clear signal--and have arrived back at MVHQ.
Most systems are still down!
While you might expect me to put corks on my forks, the two-way walk was the best thing that coulda happened to me. As I soaked in some warmth, my thoughts crystallized a bit. In that vein, and with the understanding that I'm scribin' on my lappy, I'm just gonna do the best I can.
I'm not sure if our triple-lindy resistance is gonna hold down this beast but defined risk allows for smart bets. The obvious outlier is the (3:1) internals and they've been money. The BKX chart is also on my radar as these little piggies are frisky.
The View with Boo
On the other end of the 'Ville, Boo is limping around and mumbling something about toppy NASDAQ stochastics, still triple resistance and the last gasp of hope. Still, as he wearily learned in 2003, discipline trumps conviction and we must all live to trade another day.
Edging into his mindset as well is the ability of demand to soak up bad news. Applied Materials (AMAT) was far from good and it's down a paltry quarter. Psychology is an intangible metric and we'll only know in hindsight if it truly "matters" as a function of price.
- A by-product of the hedge fund bubble is the crowded nature of technical levels. Case in point today's perfect storm (NDX 1500, S&P 1180, DJIA 10,400).
- In the digital age, shouldn't writers be called "typers?"
- Crude is the only "supply/demand" vehicle not responding to the reflation dynamic. The dollar index is now off 36 bips.
- If this is a textbook retest of the greenback acne (DXY 85), Hoofy could get some extra "juice."
- If that happens, I'll likely get stopped out of my metaphorical fur, watch the "pop and drop" and then put the corks on my forks!
- Is anyone else watching the NBA playoffs? Great games!
- Volume confirmation?
- The marked difference in my mood since getting out of the office for a half hour. There's a lesson in that and I'm glad that I was reminded of it.
- New session lows for Texas tea (3 month low).
The critters and I are huddled around my laptop as I try to scribe a vibe without many eyes. It's scary how dependent we've become on trinkets and gadgets. It's quiet--and reflective--as I carefully eye the averages try to squirt higher.
There's no crying in baseball and there's no rationalization when trading. If I get stopped out on this effort, I still consider it a worthy effort and advantageous risk/reward. The difference between mistakes and lessons is an ability to learn from them. I'm hopeful that by sharing this process, you can skip the first and catch the second.
As the evidence is seemingly mounting that Hoofy lets loose (tapes that are strong all day tend to end that way), I'm gonna humbly excuse that arm I added earlier and leave both legs in the fur (with stops just above). There are two ways to look at this move but I'm choosing to do a little "in between" in the context of a broader posture.
I've been stopped out of my metaphorical fur and will defer to the laws of discipline as I lick my wounds. Not fun but if there wasn't risk, it would be called winning--not trading.
Could we still see a "pop and drop?" Yeah, but the following elements argued for staying true to the disciplined view.
- In a reactive tape, the buyers are higher (and the sellers are lower).
- The ranks will start to thin as Memorial Day approaches.
- The traction in the financials (which still have structural issues but it won't "matter" while it's quiet).
- There's no ego in trading.
- This was a defined risk effort predicated on a particular risk/reward. Rationalizing as a function of price is a recipe for disaster.
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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