Randoms: And You Wanted to Be a Trader!
Bulls try to hold their ground as an April storm approaches.
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 As the World Turns!
Social Mood, Risk Appetites and March Madness - 9:31 am
- With regard to the debate whether this is a brave new bull or a bear market bounce(read: secular shift or cyclical turn), I'm reminded of the conversation we had in 2007 when I was asked what bothered me most about the all-time highs. The same applies now--how many of you feel like we're now in a bull market?
- Please also remember that a tried and true characteristic of a bear market rally is that the most heavily beaten (shorted) sectors are those that experience the sharpest rallies. In three weeks, the banks bounced 70%, the homebuilders 50% and retail 30%, lest anyone was curious if this again proved true.
- Societal acrimony? What societal acrimony?
- Seeing both sides, a trade above NDX 1280 would be a constructive step for the bovine in our midst. Other levels of lore include Apple (AAPL) $115, which Boo has been eyeing for quite some time. Technical analysis is a better context than catalyst, we know, but defined risk is our friend.
- The former IMF Chief Economist tells it like it is... and it ain't too purty.
- As per my last missive Friday, I enter today's fray light and tight and with a hit it to quit it mindset. I had an internal debate late Friday as to weather to keep my slug of Goldman (GS) puts but decided against it.
- There was a time in my life I would need corks on my forks this morning but I understand that opportunity cost is the other side of discipline and there will be no looking back. Profits, as we know, reside in the ride ahead.
- Alright, let's talk about it... the big, stinkin' elephant in the room. Syracuse stunk up the joint on Friday night--they never found their rhythm, couldn't buy an outside shot and were thoroughly diffused by an OU squad that executed at will. The upside to anger, perhaps, will be if Johnny Flynn returns to the hill for another thrill.
- Along those lines, snaps to Minyanville Executive Editor Jon Schwartz for sitting atop the Minyan March Madness leader board with three games remaining. The winner receives some snazzy critter shwag while the "non-winners" (there are no losers) have the option, but not the obligation, to make a donation to the RP Foundation (which, through April, will pay tribute to our fallen friend Bennet Sedacca).
- Good luck Minyans, now let's do this.
Gate Sniffage! - 10:08 am
With the tape getting pounded like a chicken cutlet, my eyes are spying green beans in the red sea, which include Amazon (AMZN) (I nibbled on some calls when the stock was pink and will slap a trailing stop on it), Abbott Labs (ABT), no Coke (Pepsi (PEP)) and a smattering of gold miners (the yellow metal up $8 despite the 1% rally by the dollar).
As discussed Friday, there's a thin line between a healthy pullback and a reversal of fortune (it's called the bottom line). I remain firmly of the view that what we've witnessed is a bear market bounce rather than the dawn of a new bovine era but with so many moving parts, I'm keeping an open mind and a fresh head as we togther find our way.
A quick sniff of our tea leaves finds NYSE internals 15:1 negative (not a typo), 5% shaves in the scruffy banks and a general malaise that only the genius possess and insane lament. Yeah, it's a tough Monday morning for global markets and as my grandfather would say, we would be wise to keep our right hand up.
I'll be back, Minyans.
The Yikes-O-Rama! - 11:38 am
Let's see--we've got the quarter-end "take that!," trepidation in front of the Aw Jeez 20, the latest sequel to Reality Bites (General Motors (GM) -25%), the potential for hedge fund redemptions (while this is from 2007, it most certainly pertains to today), looming details on the government mule (mark-to-market vote is Thursday) and, quite possibly, upside resolution to that monster VXO pennant formation we flagged Friday.
And you wanted to be a trader.
We vibed last week that "selling blips to buy dips" is the stylistic approach of choice in a bear market and, after trading from the long side and accumulating exposure (when the S&P traded with a six-handle), I was back in "hit-it-to-quit-it and make-it-to-take-it" mode. I repeated that to myself sixteen times late Friday as I begrudgingly sold my Goldman (GS) puts.
Fast forward to today's tape--I nibbled on some Amazon (AMZN) calls (me so crazy) when the stock traded dry in the face of fugly futures. While I noodled booking a quick buck, I deferred to the mechanics of the swing and continue to operate with a trailing stop. While my gun to head sense is lower prices still (for the market as a whole), setting stops removes emotion and that's where that's at.
The ability of the bovine to hold the fort, stem the tide and stick fingers in the financial dike is paramount to psychology and by extension reality (today, and in general). There were alotta bandwagon bulls quick to declare an all-clear last week after the paper chase. Buying on weakness--and creating a "higher low"--takes a bit more moxie.
Stay tuned and remember, risk management over reward chasing is necessary through the lens of financial staying power.
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.
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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