Kick some arse, Minyans!
"Aye, trade and you may die, run, and you'll live... at least a while. And dying in your beds, many years from now, would you be willin' to trade all of that from this day to that, for one chance, just one chance, to come back here and tell our enemies that they may take away our profits, but they'll never take our mojooooooooo! "
--William Wallace, Braveheart
Before we begin our battle anew, Longshanks, I wanted to quickly address my fellow Minyans. There's likely to be a fair amount of posturing in front of the pending catalysts (tomorrow's semiconductor events/Friday's economic data) and this is as good a time as any to map out a plan. I can't (and won't) tell you what's gonna happen -- nobody can -- but here are some thoughts as we prepare to fight.
In the uber-near term, please note the five-day chart of the S&P. As it stands, the last two days have developed a series of lower highs and that's the first order of business. In the NDX, you could argue that the same chart looks like a head and shoulders (negative) although dandruff patterns typically need more than five days to evolve.
Taking a step back, I'm weighing two potential scenarios. Either S&P 980 will serve as an interim top OR the "blow off" leg of this rally has a few breaths left. If the latter scenario evolves, we'll likely breach S&P 980 and take a run at S&P 1000 (and BKX 870). How you approach that move (if it occurs) is completely dependent on your chosen style. Some Minyans may want to play it long, others will look to add to the short side. My most humble opinion is that the risk is to the downside (shocker) and I've currently got one leg in the metaphorical fur (25% conviction on the short side).
I'm not sure what turns this beast other than exhaustion, but I will offer that an eventual downside exacerbation will be a function of economic flaccidity. When that reality seeps into the collective mindset, there will likely be a bottleneck near the exit sign. The momentum is powerful and, until we're appreciably lower, none of that will matter. The trick, my friends, is to sell when you can -- not when you have to.
And remember -- every man dies, but not every man lives.
Have a great day.
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 email@example.com.
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