Randoms: Beware of the All-Clear!
Emotion is the enemy when trading.
Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community. See also Bowing to Blind Risk.
My morning mission of reclaiming my identity was seemingly successful although, as with trading, there will be no victory laps until it's booked. I'm told that the E.T.A. on my passport and the like is five business days so until such time, I'm the writer/trader formerly known as Toddo.
Some top line vibes as I settle into the mix:
- We've mapped our thoughts for all to see and as old school Minyans will attest, we're sometimes right, sometimes wrong but always honest.
- As I watched a financial media show last night at the gym (it was already on and I couldn't change the channel), there was "jumping up and down" eagerness to buy the banks--any banks... every bank.
- Now, I "get" that they're still down 65% from BKX 120--we were, as you know, quite cautious on the group into the top and all the way down--and that's necessary perspective when assimilating risk. To be sure, the "easy" short-side trade in the sector is long gone.
- Given the 130% rally off the March lows, coupled with the euphoria that banks only need $75 billion in equity (assuming base case assumptions prove true), I'll simply say two things. First, risk management trumps reward chasing and second, the provider of opinions won't shoulder your losses, should they occur, so make sure you trust the source before you think for yourself.
- Through the lens of "let's listen to folks who actually saw the storm coming in the first place," I, for one, was quite interested to digest Mr. Practical's take on the stress tests. Not surprisingly, he and I are on the same page with this one.
- I unwound my blind risk--not to be confused with Blind Faith--into yesterday's bell.
- When I arrived at my turret this morning to find a widespread circle smirk, I re-initiated some negative bets on the S&P and the financials. I also tried to add back some Apple (AAPL) puts when it was up a deuce but it was deja vu all over again (I missed 'em).
- I don't wanna get into tin foil hats, grassy knolls or invisible hands but it's not like there isn't precedence. Amongst the short-side risk today is the potential that on the heels of a highly anticipated systemically significant announcement, there will be some "defense" from unseen sources. Nobody is bigger than the market, we know, but it's unfortunately part of the trading equation we must assimilate in today's day and age.
- S&P 920 is the first level of lore and S&P 950 is double secret resistance. As recently discussed, I'm "selling blips to buy dips" as a retest of the acne zone (S&P 875) seems intuitive as a first step as we sniff out the Widow's Peak of 2009.
- If you're in the market for top notch economic analysis, take a look at The Lavery Insight by Jack Lavery.
- If you're having communication or travel snafus, repeat after me: It's not your fault, it's not your fault, it's not your fault. Why? It's Mercury Retrograde again (ugh) and some things are out of our hands.
- WWBD? Ping me to say Goldman Sachs (GS) RED.
- Good luck Minyans. See both sides and let's be careful out there!
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 firstname.lastname@example.org.
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