By Todd Harrison Aug 11, 2003 10:45 am
Watch those broke and brokers for signs of breakage!
Reflexes got the better of me
And what is to be must be
Every day the bucket goes to the well
But one day the bottom will drop out
The Minx blinks to life and another freaky week has officially begun. The morning story is one of mean reversal--not in a "that's one bad ass turnaround" sense but rather in a "the early action is a mirror image of last week's trading" sorta way. The N's act relatively better than the S's, gold stocks are (gasp!) lower and Fokker is actually in a good mood. Hey little buddy--maybe you should do the Hamptons thing more often!
A few observations along the watchtower. Almost everybody I speak with expects today to end with green screens--particularly in tech--as we edge through an edgeless session. It wouldn't shock me, I suppose, but there are a few things to keep an eye on as we trudge through the muck. Bonds, for one, are taking it on the chin and after Friday's sloppy close, that warrants attention. Perhaps that's why the financials trade a bit funky and I'm keeping an uber-close eye on that complex as the BKX tickles its 50-day moving average.
I, for one, am using today to manicure my risk and put some longer dated bets on. I've been dabbling in the gold stocks lately and I sense that, over time, they'll continue to work higher. The potential tarnish on that luster is the dollar which, as you know, I believe will eventually lose sponsorship. I suppose I can rationalize the disconnect as one of timing. I "think" that gold (as a relative safety play) will appreciate in the intermediate term while the dollar squalor may take longer to play out.
In equity land, I continue to like some "out month" puts in the financials and I've rented some cyclical exposure against them. I'm pretty light in four-letter land, although I've got a pairs trade on in the semi space and some longer dated puts stuffed under my mattress. Finally, I've been doing some work on the energy patch and I've begun a small call position in the drillers.
Technically speaking, watch NDX 1240 and S&P 987 as the first resistance and respect the edgeless nature of today's tape. The breadth is 2:1 positive, the early tone is firm and the Nazz is due for a bounce. With that said, I still believe that we've seen the highs for the year and if (big if) I'm right, rallies should be sold rather than bought. Obviously, you've got to make that decision for yourself as you'll reap the rewards if you're right or pay the price if you're wrong.
Watch the brokers as they're the potential fly in today's ointment. It's thin, there's a decent amount of information due this week and traders, now more than ever, are reactive. And keep it all in perspective, my friends, as it's a ways to a means, not a means to an end.
Fare ye well.
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