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Canary in a Coal Mine


It's a fantastic trading market if you've been in a rhythm but if you're half a step slow, it's been a recipe for serious whippage.


"First to fall over when the atmosphere is less than perfect.
Your sensibilities are shaken by the slightest defect.
You live your life like a canary in a coal mine.
You get so dizzy even walking in a straight line..."

(The Police)

I hear ya, Minyans--I don't blame you for being a bit dizzy. Over the last month, the S&P has seen more swings than a Hedonism vacation! Up, down, up, down--it's a fantastic trading market if you've been in a rhythm but if you're half a step slow? It's been a recipe for serious whippage.

We've talked about the "double top with a lower high" in the S&P and that's a technical crutch for the bears. Another element worthy of a mention is the higher lows in the VXO.

We know that liquidity is the opposite of volatility, which makes sense if you think about it. Have you ever tried to buy a thin stock and watched it scatter away? The same dynamic works in reverse when the market is flooded with liquidity, as evidenced by years of VXO 10-ish as Greenspan kept the spigot open.

As we've seen various gut checks and rebounds this year, the dip shtick is good and thick.

But the above mentioned inputs, along with the fresh '07 lows in the banks, continued credit concerns (as measured by the ABX indices), uncertainty surrounding the super-conduit (although Fannie Mae (FNM) is precedence that exceptions to reporting rules are allowed), the narrowed leadership in tech and imbalances that are cumulative (as so many folks are quick to dismiss them) are all reasons to keep our right hand up.

I'm not smart enough to know if these will finally "matter" but I'm seasoned enough to respect that the conditional elements remain in place. As I wrote this morning, that caution has cost me opportunities---and yes, at times, real money--but that's not a viable reason to abandon discipline. In fact, one could argue that it's all the more reason to practice it.

That's about it from where I sit as we stare into the Invisible Sun. And while we're on that topic, I gotta give my buddy Bobby snaps for A) his philanthropic work and B) his incredible pictures that were featured during this tour. If you haven't had a shot to see 'em, take a look--and look right into the eyes. It's the window to the soul.

May peace be with you.


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

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.

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