The path to profitability is paved with false hope and littered lifts. Stay tight, remain lucid and remove emotion from the process.
- What kinda bounce was that?!?
- Following Turnaround Tuesday's southbound soiree, the S&P was poised to open in the hole and near the 200-day. As trader types "front ran" that level, however, the market opened near the flat-line. The subsequent slippage was intuitive, as the financials didn't catch an initial bid and probes lower typically follow sloppy sessions.
- Sensing the sterner test, I counted to 100 (backwards, by primes) and punted my S&P puts into that meltage. I wasn't calling a bottom, I was simply taking a trade. If a fool and his money are lucky enough to stumble on 40 S&P points in 24 hours…
- Just as I took a deep breath and enjoyed a momentary abatement of risk (for a change), I spied the action in the financials and the bunk breadth (2:1 negative) and slipped back into some puts with a tight stop above a fresh daily high (which I then rolled down to the other side of the S&P 200-day). I wasn't being greedy, I was just following my eyes and trading the spy's--and doing so with uber-tight risk parameters.
- That short-side try was stopped out for a push. When my put prices didn't appreciate with the blink-and-ya-missed it ten handle dip, it was a sure sign that premiums were getting a little nutty. That's always been a rule of thumb for me---when I'm trading well (and not making money), it's a sign to slow down. When I'm trading poorly and making cake, it's time to press the bet.
- This was all chronicled, of course, on the Buzz & Banter , which is real-time and real good.
- Beazer Homes (BZH) was down as much as 32% as (unconfirmed) chatter circulated that the stock was going belly up. We don't "do" rumors in the 'Ville but the price action suggested that there's more to this than the typical whisper. Keep it on your radar as a sentiment tell today (it has since halved it's losses).
- Please note that liquidity is thin out there. Minyans might wanna take smaller positions as a result .
- We've now seen the fourth test of the S&P 200-day and as support (resistance) weakens with each attendant probe, we should file that away in the back of our crowded keppe.
- Why people trade: to make money.
- They're playing leapfrog! The Coldman's, er Goldman remains the most important stock in the universe and GS 189 is level of lore. It's less obvious than the S&P but equally important from a sentiment standpoint. Professor Coop De Ville, who's been pretty insane in the name, is eyeing GS $177 as a spot to trot.
- See Goldenstar as it sits on the 200-day. It's like Goldman, but with an extra "S" (and a lot less subprime exposure). GSS $3.45 seems like a good defined risk level for those looking for a quicker schnitz.
- The poster child for staying single?
- Check out the level in the VXO as it probes past support and existing resistance dating back to bubble days. This is the "other side of liquidity." The more sloshy the tape, the more depressed vols become. If liquidity is being removed from the system, volatility levels will uptick in kind.
- Under the radar, keep this massive $50 billion technology spend on ye radar. Winners include EDS, IBM, LLL and UIS.
- I went fishing this morning and while it remains to be seen what's nibblin' on our bait, the action in Australia's Macquarie Bank Ltd (-10%) reminds us that there are alotta sharks in the South Pacific. One of it's funds was bitten for 25% despite not having direct exposure to the U.S sub-prime market.
- The name of the fund? The Bear Stearns Asset-Backed Securities Fund. The disturbing rub? It wasn't leveraged, which means that there was no pressure to sell its securities. It had less than 0.5% of it's assets in sub-prime.
- The path to profitability is paved with false hope and littered lifts. Stay tight, remain lucid and remove emotion from the process. Volatility can be a good thing if you're head is screwed on straight.
- If you wanna put some pep in your step, join Hoofy and Boo for a morning cup of Starbucks! Their latest take on the coffee house is NOT to be missed. SERIOUSLYYOUDONTWANNAMISSIT
- I'll tell ya, it's very hard to believe that we were talking NEW HIGHS seven sessions ago--SEVEN SESSIONS?--and now the wheels are wobblin' on the Wall Street wagon. Wowzers---that's hard to fathom and I've gotta pretty active imagination.
- I've gotta 1:00 EST crosstown, uber-important meld. Hey, you know that if it wasn't in the best interest of the critter mission, I wouldn't allow the mindshare (trading at a premium these days). It is, so I will and I thank you in advance as we build the 'Ville brick by brick and Minyan by Minyan.
- Fare ye well into the bell!
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.
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