Randoms: Shadow Boxer!
Sticking and moving ahead of the jobs data
I know, it sorta feels like Groundhog Day on this side of the screen too! As the opening bell tolled, the flickering ticks that caught my attention were in the top left of my third screen, the area with a financial focus. American International Group (AIG)? +30%. Fannie (FNM) and Freddie (FRE)? 20% each (OK, it's on 16 cents). Bank of America (BAC), Citigroup (C), American Express (AXP)? Three, four, five percent, respectively.
The standout Sally with a red head? JP Morgan (JPM), which warrants attention as a potential vehicle for those with a short-side inclination. If it can't rally with it's brethren ripping, it typically portends some semblance of supply. But alas, I digress...I had a point, somewhere.
Ah yes, the financials. I was having a conversation last night about the action in the group, the specter of "mark-ups" as a function of the Radian (RDN) Group commentary yesterday. Given the technical inflection, the legitimacy of this dynamic could well be the catalyst either way.
Could there be a wave of mark-ups? Sure, I suppose.
Will it eventually wave the other way as this crisis evolves into a mindset? I believe so.
What is the timing of that? I'm not smart enough to know.
What I can say is that perception is reality in the marketplace and for purposes of profitability, we need to capture the disconnect between the two.
You know where I stand (up, as far as "guys" go) and how I sit (leaning to the left). You also know my positioning, as I've put it out there for better or for worse. I would by lying if I said I wasn't itching in my bear costume but given the set-up and my defined risk, the song remains the same. And this song, it seems, will play straight into tomorrow's payroll data.
As discussed yesterday, a "perfect world" would include some slippage (to put some distance between today's close and tomorrow's Breakfast with Beeks) and a better-than-expected employment data. Why? Rallies phases like this typically end on good news, just as nadirs are made in the midst of bad news.
The giant question mark is, given the precise 50% retracement of the NASDAQ and the precise 50% rally in the S&P and the full lunar eclipse, is the entire set-up too cute?
Time will tell, my friends, but I know this. Given my entry level (NDX 1630, COMP 2007) and the parameters of my stop (2%), risk management trumps reward chasing as far as this bet is concerned.
Some Random Thoughts:
- People are so thirsty that in the absence of water, they'll drink the sand. But they don't drink the sand because they're thirsty, they drink the sand because they don't know the difference.
- With the NDX 2% lower than my entry level, discipline dictates peeling off some exposure in the context of trading around my still substantial bet. I punted a few Powershares (QQQQ) puts in and around NDX 1600 while saying aloud "Let your first sale be your worst sale."
- Remember when being anything but bullish was considered "unpatriotic" following 9-11? Not sure why that just popped into my crowded keppe. But it did. This guy.
- Tea Leaves? Well, the dollar is higher (thanks England!), breadth is 2:1 negative, the frisky financials are mixed (note JPMorgan (JPM) leading the bleed) and beta is somewhere between pink and crimson (I'm secretly happy I don't know what that color is called).
- Do you think Minyan Dougie Kass would be alright with me telling the world that he turned me on to gardening? True story. I sorta made fun of his obsession with flowers and plants until I started spending quality time in his east end digs. Now I've got the makings of a green thumb myself and hopefully, quite hopefully, that will spread all the way to my bottom line.
- How do I tell them that due to the unfreezing process I have no inner monologue?
- Every bear is conditioned to buy the first dip. And because of that, the dips have been Shallow Hal at best. The question, of course, is whether the preconditioned mindset will self-fulfill or start a spill?
- That second outcome sounds silly, doesn't it? Almost as silly as a 50% rally would have sounded in March? Perhaps not, but a little perspective as we find our way.
- Setting stops removes emotion, which is huge, but they won't protect us against overnight gap risk.
- Hoofy and Boo weigh in on the tax debate in a way that only Hoofy and Boo can!
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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