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The Texas Two Step

By

I could use a massage!

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Day by day night after night
Blinded by the neon lights
Hurry here hustlin' there
No one's got the time to spare


(Stevie Ray Vaughan)



Good morning and welcome back to the trading shack. We're over the Hump and that's a good thing as Hoofy attempts to grab the brass ring. He thought that he had the prize in his sight but the bears flipped the switch with all of their might. "I saw all the flies right out of the gate," Boo said of the bulls who took the green bait, "the Matador Crowd will now have to wait as we chew through the dew that dictates their fate." Can Hoofy rebound and pound the brown mound or will Boo again profoundly confound? It's tricky, it's Thursday, it's likely to thrill so kick off those shoes as we romp through the 'Ville.

We entered yesterday's session with two legs firmly planted in the bear costume (50% conviction on the short side) and walked straight into a hornet's nest. Despite a downtrodden Cisco, an Investor's Intelligence report that confirmed the lopsided lean and some sad reality in the saga of Aunt Fannie, nobody seemed all that concerned. The futures raced higher, breadth was 4:1 positive and it was game on in the city of critters.

As I surveyed the scene, a few thoughts began to crystallize in my crowded keppe. The semis were particularly slack, opening flattish in a green sea. Ditto Google, which couldn't seem to find firm footing in the Hump Day pastures. Finally, the all-important piggies edged ever-so-close to the triple resistance that is BKX 100. I took a deep breath, bit my lower lip and slipped an arm into the bear costume (making 75% conviction on the short-side).

I won't tell you that I wasn't a bit concerned-fading snazzy internals rarely pays off-but I had an exit strategy (defined risk) and could justify the effort (which is entirely different than rationalizing it). There is a fine line between fighting the tape and using price to your advantage and, often times, we won't know which side we're on until after the fact. As I watched the Nazz futures struggle, however, it became increasingly clear that more than a few chasers were trapped.

As crude raced higher (+3%) and the financials flipped the crimson switch, the bids cancelled and the reversal was on. With about thirty minutes left in the session, with the S&P sixteen handles off the high, I removed the arm from the metaphorical fur and stood steady with two legs (50% conviction on the short side). The reason? Discipline, pure and simple, as I want to trade around a bias and hit for average rather than power.


I enter today's fray with a like-minded vibe. I'm respectful of the upside agenda but wary of the sustainability, viewing S&P 1250ish (and BKX 100) as a technical framework with which to operate. The oversold condition in the money center banks should remain on our radar as the ability of the piggies to find some mojo may change the face of the minxy race. One step at a time, my friends, as we figure it out together.

On an entirely more exciting note, we're a few short days away from our much anticipated SOLD OUT Minyans in the Mountains financial retreat. MVHQ will be heading to the hills this weekend to set up shop and the critters are beside themselves with excitement. Our content proposition will shift slightly next week as most of our professors will be enjoying the journey in person. Rest assured that the ideas and insights generated in Ojai will plant plenty of seeds that we'll together sow.

Good luck today.


R.P.

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No positions in stocks mentioned.

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 todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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