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Wagon Wheeled!

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Wells Fargo throws a wrench into best-laid plans.

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The game plan was sound enough. With one eye on the reverse dandruff in the BKX (and S&P), Minyan Peter's vibe from last month continued to resonate in my crowded keppe. The banks were trying to take their lumps in the fourth quarter so they could "beat" depressed first-quarter estimates. My thought process was as follows - play with a scalpel (such my Apple (AAPL) try) and come in Monday bouncing on my toes and pounding a greasy glove.

Wells Fargo (WFC), by pre-announcing better-than-expected results this morning, threw a wrench into my best-laid plans. The animal-spirit enthusiasm jacked the tape - and, by extension, Apple opened on the other side of my defined risk technical context. Overnight gaps, as we've long discussed, are the fatal flaw of setting stops. It was a risk I assimilated and respected - but an unforeseen catalyst punched me in the ear.

It's not the first time Wells played the foil. Old-school Minyans will remember my infamous Letter I story, when WFC made a hostile bid that turned what would have been a multi-million dollar gain into a 7-figure loss. Just as my thought process was sound -- wrong, but sound -- 10 years ago, I view the mechanics of my recent swing equally stable. That's not post-rationalization, my friends, as these things happen. If there wasn't risk to this business, it would be called "winning," not "trading."

As for my process, I gave my position until after the first half-hour to monitor whether we would see rotation away from extended issues (big beta) into the under-owned financials. When the stock didn't "come in," I dutifully cut my position by 65%, leaving a remnant equivalent to a spare chip. We could see a magnet to $120, but anything over that will see my cut the remaining bait. Either way, it was a losing bet, and I share the process in the hope that my mistakes will be your lesson.

Better me than you, and I mean that sincerely.

Please keep BKX 32.5 on your radar, as a push above that zone will be a technically positive development. Mea culpa on the reverse Newton, and I look forward to making it up in spades.

As always, I hope this finds you well.

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In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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Position in AAPL

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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