Love and War
Are these Saddam rumors gonna surface every day?
I was talkin' with a friend of mine
He said a woman had hurt his pride
She told him that she loved him so
And then turned around and let him go
Another slow summer sessions slinks along and it's so quiet, you can hear a bonus drop! Young Fokker was so concerned about the lethargy, he offered to get his shine box and buffer the shluffer. I respect the initiative, Spider, but don't go writing off this session just yet--we've still got a lot of trading left in the day and I need you on your toes.
Today's theme, as noted first thing this ayem, is all about field position. A serious battle has developed at the S&P 1000 level and, thus far, that's been the story. The initial flurry of upside tries failed to break out the trusty SPY's and the rest of the market is keying off that. Sure, there are sub-plots...the biotechs act great (BBH 132 held), the semicaps are firm, bonds continue to burn and the financials under-perform. The focus keeps circling back to our levels, however, and that's what traders are talking about.
The fact of the matter is that, after the recent sideways action, the near-term is up for grabs. As a big picture bear, my natural predilection is skewed to the downside. I think the Minx is on borrowed time and despite the declaration of Hoofy's independence, I fear the worst. I don't know what the catalyst will be but when it happens, it'll highlight the elements we've discussed to date. To be sure, the combination of euphoric sentiment and utter complacency is a dangerous backdrop in which to operate.
With that said, and through objective eyes, I can "see" what the bulls are looking at. They're making the case for a new base, and after the recent consolidation, we can't rule that out. With the liquidity injection, pending election and the potential for economic validation (albeit marginal), the possibility exists that the mojo has legs. I may not agree with the logic (I don't) but I most certainly respect the perception that has been driving this market.
Absent tomorrow's consumer confidence (exp. 85) and a spate of earnings (Clear Channel (CCU:NYSE), Dupont (DD:NYSE), McDonalds (MCD:NYSE)), it'll remain quiet for the next couple of sessions. That'll leave the Minx up to her own devices and highlight the psychological metric. The goal, my friends, isn't to play every trade, it's simply to have a high win percentage on the trades we choose to make.
As always, I hope this finds you well.
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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