Turning the Corner
Deja Boo! Look at these biotechs!
Good morning and welcome back to the future. While the flowers of our fifth month have wilted in each of the last few years, the seeds of hope continue to sow and grow. Now, with May's day officially having gone away, most of your fellow financial farmers have firmly bitten into the forbidden fruit. It's hard to argue with success (or lack of a relative substitute) and, judging by the price action, that very desire for participation is driving the Minx higher. Can the rain maintain the fertile equity grain or will an inevitable pain stain the summer rally train? Settle down and settle in, Minyans, for a new season of wiggles and giggles is upon us!
The springtime launch off the duct-tape lows has been littered with traders dutifully picking tops. In each and every instance, the ursine uglies have been hugged and squeezed into submission by the awesome momentum of the upside assault. The latest and greatest technical resistance (S&P 965) is the last gasp for many bears and, rest assured, IF (big if) Hoofy's heroes can violate this zone, the vacuum of doubt will empty entirely. The zillion dollar question then becomes: Is a potential short-side capitulation plain 'ol good discipline or a last gasp of hope that begs to be faded (read: sold)?
As with most answers, there's no black or white -- only a rainbow of possibilities. In our constant search for the proverbial pot of gold, we must look within and define our individual limits. This is a humbling business and any trader worth their pepper has made mistakes along the way. If we learn from them, however, they morph into lessons and that, my friends, is the hallmark of longevity. I've traded my way through many tapes and I'm still taught something new on a daily basis. What I am currently attempting to do is assimilate what was, what is and what will be and marry them into a cohesive plan of attack.
There's a fine line between "rolling rationalization" and an adaptive tactical strategy. I recall with great clarity past environments that felt impervious and watched as conventional wisdom reached an apex of exhaustion. Our current juncture can seemingly do no wrong and, with the likely spurt past the latest and greatest inflection point, there will be few(er) reasons to doubt the bull's clout. My inner inkling has been that the "all clear" had to sound before a trading top was found and the seductive sirens are starting to sing.
A textbook trading scenerio would call for a firm session today and a higher opening tomorrow. That would likely put the Minx within spitting distance of S&P 980 and line up a handful of downside technical ducks. While I understand that our travels must be taken one step at a time, I wanted to think out loud as I digest this potential "set-up." If (big if) this plays out, it would fit right into our long discussed down/up/DOWN thesis and catch the majority leaning the long way.
It's a June moon, Minyans, and I'm entering it with a renewed vigor and added excitement. Everything is cyclical in our world including the seasons, markets, moods, luck and, of course, the trading mojo. The beauty of life in general and our path in particular is that we're offered daily opportunities to better ourselves. That journey must begin within and the sooner we take the first step, the closer we'll get to our destination.
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.
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