Monkees and Minyanville
Offsides? The bond market just rallied a full point!
"I have called this principle, by which each slight variation, if useful, is preserved, by the term Natural Selection."
Good morning and welcome back to the ursine snack. After three full days in the seasonal haze, the critters returned to a crimson red phase. While one day does not a new trend begin, some damage was done to Hoofy's glass chin. "I've heard young Boo's rant and believe it's just noise," he said to his friends and maintained his poise, "but bears will be bears and boys will be boys, so please don't fall prey to the tricky fur ploys!" Was this just a pause in a broader bull cause or will we soon hear more Red Dye applause? It's a spankin' new day as we brush off our skills and ready anew for a romp through the 'Ville!
Any trader worth their salt will tell you that credibility is a function of return. It doesn't matter if you're trading a single position, a portfolio of stocks or a large diverse fund, the bottom line dictates your relative value in the eyes of your peers. It's the nature of the beast and it's been that way for as long as the ticks have flickered. Lotsa folks base their individual view on an assimilation of valued opinions and weed out, over time, those that fail to produce. It's human nature and time tested in its application.
If we apply these basic lessons to the minxy market, we can learn a lot about financial psychology. At the most basic level, we'll watch how a stock acts. Once comfortable, we'll broaden our view to incorporate its industry peers. Then, perhaps, we'll grow familiar with other sectors and note how they coexist. From there, once capable with equities in general, we learn that asset classes correlate in some fashion and extract information from their relative movements.
This forms perception which, when commingled with the structural forces, fundamental inputs and technical pressures, dictates future price action. It seems simple enough, right? Just figure out which metric matters most at any given time and formulate a strategy based on the strength of the legs under the table. There will be obstacles--emotion comes to mind as a primary headwind--but the firmer the foundation, the higher the probability of a profitable outcome.
Our current juncture is interesting--if not difficult--as the metric weighting may be morphing. We've discussed the structural influences (Carrie), overhead resistance (S&P 1140, NDX 2015, BKX 98, INDU 10-4)/support (COMP 1976) and we're readying for a dizzying array of corporate communication. The wildcard (and perhaps the single biggest variable) in the minxy mix remains the collective psychology. For if perception is truly reality, interpretation holds the key to the forward vault.
I've long maintained that the stock market is the world's largest thermometer and, as such, is the driver of most financial decisions. As long as the screens are green, purse strings are loose and the mood looser. But once the stimuli dries, wealth deflation kicks in and the inevitable music is faced, the entire dynamic will sadly shift. It is then that folks like Elmer and Franklin will be held to task and, for most, the first time that they'll be seeing the other side of the coin.
Our goal in Minyanville is to inform and educate, to plant the seeds that provoke thought and provide the tools that will enable you to make better and more informed decisions for yourself. That doesn't mean you're supposed to get "all beared up" and leverage yourself short, it simply implies that you must allow for all outcomes when mapping out a trade horizon and risk profile. One thing for certain, Minyans, alotta people are gonna get caught with their shorts down when the perfect storm hits. Our hope is that by reading the 'Ville, you'll have an umbrella handy.
Good luck today.
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.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
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