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Simple Simon?


All good things must come to an end.


Cecilia, you're breaking my heart
You're shaking my confidence daily
Oh, Cecilia, I'm down on my knees
I'm begging you please to come home...

(Paul Simon)

Good morning and welcome back to the slithery slack. The journey continues to slumber along as Hoofy digs in and decides to stay long. You can't blame the bull as the tape has been firm and most of his charts have served to confirm. "The bears always look for a reason to fret," the bovine opined of the ursine regret, "they're pointing to things like compression and debt but those aren't threats that matter just yet." Is he gonna ride the upside worldwide or are we setting up for a nosty bear slide? The flickering ticks will let us know soon so settle on in at the Minxy saloon!

As we weigh the fray from every way, it's easy to find reasons to support either side of the critter mission. When I walked into my office this morning, Hoofy was sitting at my desk with his feet up and staring at a chart of the DJIA. "Hey Toddo," he began, hoofs behind his head, "You see the textbook reverse dandruff in the industrials?" I walked over to the brazen bovine and took a look at what he was eyeing. "Yep," I said, "You can certainly make a case that this is a bullish pattern, particularly in light of what Pepe mentioned the other day."

"So," he said wryly, sipping on his iced coffee (extra milk), "why do you insist on keeping two legs in your bear costume (50% conviction on the short side)." I sighed deeply as I've shared this tale of late and redundancy is a pet peeve of mine (redundancy is a pet peeve of mine). "In addition to the thoughts I've mapped out, I will also share that I've had alotta conversations with Tom DeMark recently and he believes that we're at a multiple major inflection points. The DJIA set-up should certainly be factored into the probability spectrum but with a defined risk stop above, I'm viewing the dew sans emotion."

The big bull sighed and rolled his eyes. He's been fighting for respect in the city of critters despite multiyear-and in some cases all-time-highs. And, to be sure, frustration reigns on the other side of the aisle as well. I fielded a few mailbags yesterday from Minyans who were abandoning put protection as they've been a drag on performance. My response was that "you always want to lose money on your hedges," one of the first rules of thumb I learned when I began in this business.

There's been a ton of talk about the decade low volatility levels and I'll weigh in with the following thoughts:

  • The low volatility environment is a function of compression rather than downside causation.
  • The dichotomy between perception and reality is perhaps the biggest disconnect on my radar.
  • If approached intelligently, either with stock replacements or "married puts," volatility levels are a blessing rather than a burden.
  • "Low vol" isn't a universal blanket. Individual stock situations exist where vols are pumped to fairly fat.
  • Please don't dabble in the derivative universe unless you're well versed in the risks.

We power up the Thursday pup to find Europe taking a dip in the crimson pond, the dollar hangin' on to Cliff Branch and the metals off a bit (after their shining moment yesterday). Levels to watch include BKX 100, XAU 95ish (past ceiling, new floor) and the S&P (Fibonacci above). And, of course, our eyes will spy the breadth, sector leadership (rotation) and the macro crosscurrents as we paddle through another puddle. Keep your heads up and your eyes wide, Minyans, as something tells me that Sammy is gonna get spanked soon.

Good luck today.


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

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.

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