Randoms: The Prism of Reality
Emotions are best left for weddings and funerals.
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Gate Sniffage! - 10:35 am
Do you take a deep breath on the opening and allow a half hour for a truer tenor to emerge for the tape?
Now that the "noise" has settled, I've slapped some trailing stops on my downside exposure in the S&P and financials. While I foresee a sterner test (consistent with the "W" thesis), I'm unsure if we need to test double secret resistance at S&P 950-960 first. Hence, I'm operating "in between" until a more advantageous risk/reward shows itself.
Did Aaron Pierce "do it?"
So Ben Bernanke sees "signs of bottoming" in the U.S. housing market. That would be AWESOME--a recovery bodes well for us all!--but please, Minyans, remember the source. This is the same dude who--along with Janet Yellen, Dick Fisher, Hank Paulson and Freddy Mishkin--assured us that sub-prime was contained in April, 2007.
I'm not saying it's not, I'm simply saying to take it with a grain of salt. I, for one, prefer to listen to folks who saw this mess coming in the first place.
The market is a forward-looking discounting mechanism. One could argue that the specter of recovery has been priced into the homies given the 80% rally off the March lows. Along those lines, note the downtrend line--and the action in the HGX as it tickles it--for we could learn a lot just by watching.
Where is Steve Perry these days?
When the going gets tough, just remember you're a Minyan!
The Art of the Science - 11:00 am
Depending on your perspective and adjusting for time horizon, you can find all sorts of patterns through the lens of technical analysis. Along those lines, Bahston Minyan G-Hill (who always seems to email when the Sox beat the Yanks) points out that yesterday's lift took the S&P precisely to the underbelly of the previous uptrend.
Click to enlarge
Thanks for the eyes, Big Papi.
The Prism of Realism - 1:30 pm
Other than the fact that I can't seem to shake Steve Perry from my crowded keppe, today's fray is pretty much par for the course-a case to be made on both sides of the stressful ride and the attendant risk/reward associated with making an educated decision.
Here's what I'm thinking about when it doesn't relate to music that most certainly shows my age:
It's easier to make money between the twenties (in the meat of the move) rather than catching cusps in the red zone. Given the recent acne in the S&P (above 875), looming catalysts and Jeff Saut's "buying exhaustion," however, we must respect the potential that the widow's peak in the "W" scenario may be close at hand.
Given the recent run, pink is the new green. Respect-but never defer to-the price action.
You know what axiom keeps coming to mind? Trade to win, never trade "not to lose." My grandfather Ruby always told me not to run scared and that can be applied to oh so many things in life, including our approach to the market.
Over in Tea Leaves R' Us, NYSE internals are 2:1 negative which is the only duck that's currently quacking. Everything else is a mixed bag of nuts, which is apropos given the crazy state of financial affairs.
Has anyone ever lost a drivers license at the same time his or her passport expired? It's almost like you don't exist, unless of course you can find your birth certificate (which I can't). And you can't get a copy of your birth certificate without, you guessed it, a valid drivers license or passport. Like I need this right now?
Finally, so it's said and as old school Minyans know, I would absolutely love to see a real recovery as it would bode well for all of us, including the 'Ville. The thing is, one could argue that we were never allowed to take our medicine following the implosion of the tech bubble and the gains we saw were a function of credit induced growth rather than a legitimate economic demand. That was masked by the falling dollar and skewed by the spending habits of a slimming margin of society, which was lost on most Americans but front and center for foreign holders of dollar denominated assets.
That Grand Experiment has been exposed and we're taking our medicine of time and price, which is on the margin constructive. While admitting you have a problem is the first step towards solving it, it cannot be fixed with the same "remedy" that caused the problem in the first place. I'm an optimist by nature but a realist when it comes to the financial machination and my only motivation in sharing my thoughts-and the creation of Minyanville itself-is to affect positive change through financial understanding throughout our community.
From the ABC's to 401(k)'s, we'll get there, one step at a time.
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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