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Random Thoughts: 10 Days Left in the 2011 Tape


Weighing in on the two-sided ride.

Once we navigate today's freaky session, there will be 10 sessions left in the 2011 tape; 10 days to stress, 10 days to posture, 10 days to squirrel away a few nuts-10 days until the cash register resets.

For many, the next 10 days may have profound consequences for their next 10 years. Funds are blowing up as we speak (which is partly responsible for the forced selling in commodities of late) and those left are in a dance to the death with their benchmark.

In the perverse world of money management, it's alright if the market trades lower as long as you lose less; should it trade higher without your participation, however, you could find yourself looking for another job-or even another profession (which may or may not be a bad thing).

I've done that dance plenty over my 20+ year career on Wall Street; this is where the rubber meets the road, where performance anxiety permeates and where the payday is so close you can almost taste it.

For the rest of the world, thoughts have already started to migrate to year-end vacations; time with the family, a respite from reality and upcoming vacations-or staycations, as the case may be.

I've spent a lot of time discussing the difference between having fun and being happy, net worth versus self worth and looking for validation at the bottom of a bank account. That's not to say money doesn't matter-it does-but when you focus so hard on getting ahead, you sometimes forget to enjoy the journey-and by the time you get to where you thought you wanted to be, it's already over.

That's one man's humble philosophy, but many of you already know that. So without further adieu, I'll turn my attention back to the reason you're likely reading this article-our take on the tape. Some random thoughts, in no particular order:
  • Expiration influences manifest in the days prior to the actual expiry, which might explain some of the fits and starts this week. Keep your eyes peeled for "pin risk," which occurs when stocks are pulled to strike prices where open interest is outsized relative to average daily volume.
  • There are only two kinds of market players left, robots aside: those who have to trade, and those who want to trade. If you're in the latter group, understand that the former storm is very emotional and reactive, and that's more difficult (on the margin) than the rest of the year, which was pretty tricky in its own right!
  • We wrote early this morning on the Buzz that we should see at least one press lower today; the trick to the (broader) trade is to watch how our primary tells react relative to that movement in the futures. And yes, a lot will depend on the price action in the financials, where Deutsche Bank (DB) and Barclays (BCS) are overseas tells and Bank America (BAC) (above $5), Goldman (GS) and Citigroup (C) serve as stateside proxies.
  • I have defined risk in my Research in Motion (RIMM) counter-trend long position-I can only lose $14.95! I'm kidding (sorta) but I did add a snivlet of $15 stock late yesterday to the pre-existing placeholder of a position. I'm not gonna give it too much room, but I will give it some as I sense an emerging situation given the 75% decline this calendar year. Earnings are due after the close, but they already pre-announced last week, so you know.
  • I also spied this article, for those interested in the name, although it should be said that I'm not married to it-it's just a trade.
  • The story of yesterday's session is in the commodity space, with gold down $87 and silver off 7.5%. Why do I bring this up? Because commodity volatility typically precedes equity movement.
  • The single most important data point thus far today? The greenback has given some love back and is 40 bips lower. As you know by now, a lower dollar is a necessary precursor to-but no guarantor of-higher asset class prices.
  • Levels of lore include S&P 2227 (50-day, directly above) and S&P 1261 (200-day), NDX 2290 (for obvious reasons, if and when), DJIA 11940 (the 200-day) and our ol' friend BKX 40, which may well win "tell of the year" if it continues to serve as such a strong stealth proxy.
  • If I put my traders hat on, I would offer that the market is speaking and ask, "Are you listening?"
  • If I put my Minyanville hat on, I would be jamming between meetings for the better part of today (again).
If you're looking for pure nuts and guts market stuff, stop reading here. If you're open to a little human interest, carry on...

I've gotten away from some of the human interest stuff this year as a function of social mood (most folks don't wanna hear "good news"; they're more concerned with how the new world order will affect their particular situations-and I get it!). Still, I would be remiss if I didn't express my heartfelt appreciation for the many blessings of 2011 as it's been the most eventful year of my life.

From the birth of Ruby to my engagement to Jamie, Gavin and Mug, publishing my first book and meaningful breakthroughs in the 'Ville, our philanthropic endeavors at The RP Foundation, the newfound friendships formed throughout the year and the ones that persevered another tough stretch, not a day passes without me thanking Jamie for the blessings she has brought me, and it's OK to put that appreciation out into the universe once in a while. Gratitude is latitude, and we all have a LOT to be thankful for.

May peace be with you.


Twitter: @todd_harrison

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