Is The Worst Over?
...volatility will be exacerbated (both ways) into today's close.
The following article appeared on the Buzz & Banter at 1:22 EST and we share it for benefit of the Minyanship.
"I don't wanna puke!" Marie Kimble Johnson, The Jerk
I hear ya Marie, I don't think anyone wants to puke. But anyone who has puked knows that you often feel a lot better afterward. That's the hope for the Matador Crowd right now--that the last thing a correction should feel like is that it is a correction. That it has to feel "crashy" in order to put in a near-term bottom.
That's the bull case. That, and the clinging Cliff Branch that is the double bottom in the banks. The sticky green financials will be the tell, with the benefit of hindsight, if Snapper can somehow manage to show his face.
The bear case, which you're now hearing from the mainstream media, is likely familar fare for ye faithful. We've been mapping these risks for quite some time and respect the cumulative nature of the imbalances, the proliferation of derivatives and the implications for our finance-based economy.
The "worst case" scenario is that we'll see a sloppy close and a heavy Friday, just as front-month protection expires, leading to a very tenuous weekend fret. I'm not smart enough to know whether that happens but for what it's worth--and it may not be much--I'm not playing it that way. In fact, I've been buying into this for a trade and with a tight stop.
Remember Minyans, expiration influences manifest in the days prior to the actual expiry. What that means in plain English is that volatility will be exacerbated (both ways) into today's close. I continue to feel that the Street is caught "short gamma," which means they get longer lower and shorter higher. Imagine that--it can't be a fun place to be.
As far as spying eyes, I'm watching the financials (Bear Stearns (BSC), JP Morgan (JPM), Bank of America (BAC), Fannie Mae (FNM) trade well), the metal equities (PAAS and SSRI are both down 15% as a function of perceived liquidation), the semis (still dry), the VXO (+14%, or +265% since we eyed the uptick) and the clock.
Why the clock? I've got a date with Calgon near the close. Take me away...!
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 email@example.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.
Daily Recap Newsletter