Random Thoughts: Trading Low Vs. Market Bottom
Hangover from the bursting of the debt bubble will last a long time.
Morning Dew for Me and You - 9:17 am
Morning Minyans, and welcome back to the world's wildest reality show. Folks all around our grand land await the opening bell, popcorn in hand, as the financial script unfolds in real-time. Following some early morning segments on Yahoo TV--posting soon to the 'Ville--I settle into my seat with hat in hand and eyes wide open. Some early morning vibes:
- What's a sadder song--It's Too Late by Carole King or Harry Chapin's Cat's in the Cradle? (Wow, I really am that old.)
Fund vs. Fund? Yeah, on the one side you have hedge fund redemptions (forced selling of winners and sinners) and on the other, peeking around the corner, the potential for performance anxiety in mutual fund land (that will only kick in if a rally sticks). Through their eyes, the only thing worse than losing money is under-performing.
Yes, I've adopted a more constructive trading stance and no, it doesn't feel right. Someone once said that the hardest fades are the toughest trades but that most certainly remains to be seen.
There is a difference between a trading low and a market bottom. The hangover from the poppage of the MOAB (mother of all bubbles) will last a long time but the destination pales in comparison to the path.
Three things remain on my near-term radar. Credit lubrication (nascent signs but a ways to go), the dollar (equity bulls don't wanna see a stronger greenback) and the tenor of the current test (breadth, the reaction to news (Citigroup (C), Merrill (MER), United Technology (UTX), UBS (UBS) and Friday's intraday lows at S&P 840, INDU 7880 and NDX 1200).
As discussed yesterday, my sense is that Hank will try to pull a bunny from his magic hat before Friday's expiration (perhaps another globally coordinated 50 bip snip). The market seems to sense that too so we'll need to watch the reaction to NO news.
Is the "easy trade" the first fade lower? Perhaps. Either way, remember that each day has a P&L unto itself and don't press to make up for lost ground. The mechanics of the swing are more important than the results of the at-bat.
Fare ye well Minyans and remember, discipline over conviction as we find our way.
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