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2009: The Year of the "W"

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We're currently somewhere near the middle peak.

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With White Snake echoing in my crowded keppe and a multitude of crosscurrents jockeying for attention, I wanted to clear the mechanism and scribe some vibes as a follow up to yesterday's morning missive, which seems to be garnering a fair amount of attention.

In no particular order:

  • A smart man once said you can game the market direction or nail the timing but you'll rarely capture both.

  • From a big picture perch, my sense is that 2009 will look like a "W" and we're somewhere near the middle peak.

  • Through a pure technical lens, an upside breach of S&P 875 should power the tape higher. How far-and for how long-is the question I'm currently wrestling with.

  • Paradoxically, technical affirmation is a likely precursor to maximum downside frustration.

  • As I learned in 2003, agendas must be respected. No matter your view, we would be wise to remember that a cornered animal has little to lose.

  • We must remain conscious that technical analysis is but one of our four primary metrics (fundamentals, psychology and structural being the others).

  • We've long respected the other side of our Wishbone World should the dollar meaningfully debase. Understand, however, that the velocity of money can't be artificially manufactured.

  • At the end of the day, it comes down to one thing: debt. There's too much of it and inducing more is masking the symptoms rather than curing the disease. That is the single greatest flaw in the recovery thesis-that our current stroke is swimming backwards.

  • A word to the wise. When in doubt, wait it out. If opportunity cost is our greatest loss, we should consider ourselves fortunate. There will be easier trades and better days and our goal as Minyans is to achieve financial staying power so we can prosper when they arrive.


The Gold Scold

The yellow metal debate is pretty fierce. On one side, you've got a viable argument that it's the only true store of value in a world full of fiat currencies. On the other, there is the view that, in the words of Warren Buffett, "It has no utility. Anyone watching from Mars would be scratching their head."

The truth likely lies somewhere in the middle and is measured by the ultimate arbiter of price. Through that lens-and purely through that lens-I would note the three consecutive "lower highs," which is a technical negative no matter how you slice it.


Click to enlarge


I would also draw your attention to the support zone of $855-$865, which has already been tested twice and, if breached, would be of technical significance.

Random Thoughts

  • This chart pretty much sums it up: 17 lower highs since 2007 (unmistakably bearish) vs. how far we've fallen so very fast (-44% from the highs). See both sides, please.

  • Trading moves are characterized by three phases (denial, migration and panic) across four time horizons (nuances, trends, phases, cycles). Creating that matrix might help compartmentalize your risk.

  • Agendas abound. Please keep that in mind when absorbing the mainstream media.

  • I would be lying if I said I wasn't looking forward to taking a vacation. The question, of course, will be whether I'm allowed to fly when that time finally arrives.

  • Why do I keep thinking of the trading phrase "never let an opinion get in the way of making money"?

  • In an interwoven derivative laced financial fabric, isn't the entire banking system only as strong as the weakest bank?

  • Trade options? Want to trade options? Check out a free trial of our OptionSmith by Steve Smith (smart cookie) for options trades, analysis and in-dept strategy.

  • Y'all see those downside gaps in Research in Motion (RIMM) and Amazon (AMZN)?

  • They can't fill... right?

  • If those two master beta plays continue to sag, can Apple (AAPL) be far behind?

  • One of the Minyanville mainstay reminders is "remember to breathe." Given the recent warning from the World Health Organization, will that soon be taken from us as well?

  • Perspective, friends-it could be worse. And for alotta folks around the world, it already is. Keep your chin up for as a wise man once said, "this too, shall pass."


R.P.


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.

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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