Sounds of Blindness
Map out your strategy now so you're ready to act when the time comes!
Hello darkness my old friend
I've come to talk with you again
Because a vision softly creeping
Left its seeds while I was sleeping
The afternoon fray is a crimson array that's molding the tape and shaping the clay. We've now tested S&P 1080 three times and each probe has chewed through an incremental layer of demand. While rays of hope remain (select financials, trannies), the internals have yet to give Snapper the wink. They're not conditional to an upside try (particularly if it is future lead) but it's certainly a duck that Hoofy wants to befriend.
With a bevy of stochastics twisting along the bottom and credit spreads remaining firm, the truth is that a sharp lift can occur at any time. We must balance that observation (or hope, or fear of missing, or...) against the reality that the market is a wounded animal. Levels have been broken, sentiment gauges remain sanguine and lotsa oscillators are far from traditional bungee levels.
My internal debate is centered around the question of our time horizon. I've been looking for a squash for many moons and, as such, can't be shocked when it finally arrives. But is the big picture front and center? Has the Fed finally run out of bullets? Have the structural imbalances now tipped the scales. In short, has perception become a nasty in-your-face reality?
The "hands over eyes" analysis offers plenty of cause for paws. Rallies have been meager and quiet (no volume), leadership has been queasy at best (semis), breadth continues to stank and, heck, nobody seems that worried. In the meantime, the "great weed out" continues to ding and sting as traders become casualties and profits become scarce.
While I can't tell you where the next 5% rests, I will hopefully add nuggets of value that assist you in finding your way. As such, I'll remind ye faithful that the ability not to trade will be as important as our trading ability going forward. Pick your spots, define your risk and never rationalize your positions. Emotion, above all else, remains the enemy of a lucid financial thought process.
Fare ye well into the bell.
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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